<PAGE> 1
SCHEDULE 14C
(RULE 14C-101)
INFORMATION REQUIRED IN INFORMATION STATEMENT
SCHEDULE 14C INFORMATION
INFORMATION STATEMENT PURSUANT TO SECTION 14(C)
OF THE SECURITIES EXCHANGE ACT OF 1934
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Information Statement [ ] Confidential, for Use of the Commission
[X] Definitive Information Statement Only (as permitted by Rule 14c-5(d)(2))
</TABLE>
HEIN-WERNER CORPORATION
(Name of Registrant as Specified in Its Charter)
Payment of Filing Fee (check the appropriate box):
[ ] No fee required.
[X] Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11.
1) Title of each class of securities to which transaction applies: Common
Stock, $1.00 par value per share
2) Aggregate number of securities to which transaction applies: 181,869
3) Per unit price or other underlying value computed pursuant to Exchange Act
Rule 0-11 (Set forth the amount on which the filing fee is calculated and
state how it was determined): $12.60
4) Proposed maximum aggregate value of transaction: $2,291,549.40
5) Total fee paid: $458.31*
[ ] Fee paid previously with preliminary materials.
[X] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount previously paid: $7,524*
2) Form, Schedule or Registration Statement No.: Schedule 14D-1
3) Filing Party: Snap-on Incorporated and Snap-on Pace Company
4) Date Filed: May 4, 1998
- ---------------
* The amount previously paid assumed the purchase of 2,918,899 shares of common
stock, $1.00 par value, of Hein-Werner Corporation (the "Company"), including
the associated common share purchase rights (collectively, the "Shares"),
which were outstanding as of April 27, 1998 at $12.60 per Share, and 101,847
Shares which were then subject to outstanding options at $12.60 per share less
the exercise price of such options. As of June 15, 1998, there were 2,918,899
Shares outstanding (representing 2,737,030 Shares purchased by the Purchaser
and 181,869 Shares held by persons other than the Purchaser), which total
number of Shares is less than the number of Shares for which a filing fee was
paid on May 4, 1998, pursuant to the Offer to Purchase. The total fee with
respect to the securities to which this transaction applies is $458.31, which
was previously paid as part of the $7,524 paid pursuant to the May 4, 1998
Schedule 14D-1 filing.
<PAGE> 2
HEIN-WERNER LOGO
June 18, 1998
Dear Hein-Werner Corporation Shareholder:
As announced on April 28, 1998, Hein-Werner Corporation (the "Company"),
Snap-on Incorporated ("Parent"), a Delaware corporation, and Snap-on Pace
Company (the "Purchaser"), a Wisconsin corporation and an indirect wholly-owned
subsidiary of Parent, entered into the Agreement and Plan of Merger, dated as of
April 27, 1998, which provides, among other things, for the merger of the
Purchaser with and into the Company (the "Merger"). As a result of the Merger,
the Company will be the surviving corporation and will become an indirect
wholly-owned subsidiary of Parent. In the Merger, each outstanding share of
common stock of the Company (other than shares held by the Company or owned by
the Purchaser) will be converted into the right to receive $12.60 in cash,
without interest thereon, all as more fully set forth and described in the
accompanying Information Statement and the Merger Agreement, a copy of which is
attached as Annex I to the Information Statement.
On July 17, 1998, a special meeting of shareholders will be held for the
purpose of approving and adopting the Merger. The affirmative vote of 66 2/3% of
the aggregate voting power of the outstanding shares of common stock of the
Company will be necessary to approve the Merger. As a result of the consummation
of the Purchaser's tender offer, the Purchaser owns and has the right to vote a
sufficient number of outstanding shares to approve the Merger Agreement without
the affirmative vote of any other shareholder, thereby assuring such approval.
You are welcome to attend the special meeting; however, you are not being
asked for a proxy and are requested not to send one. The accompanying
Information Statement explains the terms of the Merger. Please read the
accompanying Information Statement carefully.
We appreciate your loyalty and support as a shareholder of our company in
the past and your continued loyalty and support as we move forward with this
transition to new ownership.
On behalf of the Board of Directors,
/s/ Joseph L. Dindorf
Joseph L. Dindorf
President and Chief Executive Officer
Hein-Werner Corporation
<PAGE> 3
HEIN-WERNER CORPORATION
2120 Pewaukee Road
Waukesha, Wisconsin 53188
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON JULY 17, 1998
To the Shareholders of
HEIN-WERNER CORPORATION:
NOTICE IS HEREBY GIVEN that a Special Meeting (the "Special Meeting") of
Shareholders of Hein-Werner Corporation (the "Company") will be held at 2120
Pewaukee Road, Waukesha, Wisconsin 53188, on July 17, 1998, at 9:00 a.m., local
time, for the following purposes:
1. To consider the approval of the Agreement and Plan of Merger, dated as
of April 27, 1998 (the "Merger Agreement"), by and among the Company, Snap-on
Incorporated, a Delaware corporation ("Parent"), and Snap-on Pace Company, a
Wisconsin corporation (the "Purchaser") and an indirect wholly-owned subsidiary
of Parent. The Merger Agreement provides, among other things, for (i) the merger
of the Purchaser with and into the Company (the "Merger"), with the Company to
continue as the surviving corporation and (ii) the conversion of all of the
issued and outstanding shares of common stock, $1.00 par value per share (the
"Common Stock"), of the Company, including the associated common share purchase
rights (the "Rights" and, together with the Common Stock, the "Shares"), (other
than Shares held by the Company or owned by the Purchaser and dissenting
shareholders), into the right to receive $12.60 per Share in cash, without
interest, all as more fully described in the accompanying Information Statement
and the Merger Agreement, a copy of which is attached as Annex I to the
Information Statement.
2. The transaction of such other business as may properly come before the
Special Meeting.
The close of business on June 15, 1998 (the "Record Date"), has been fixed
as the record date for the determination of holders of Shares entitled to
receive notice and to vote at the Special Meeting.
You are cordially invited to attend the Special Meeting; however, proxies
are not being solicited for the Special Meeting. If you wish to vote your
Shares, you or your representative must be present in person at the Special
Meeting.
SHAREHOLDERS AND BENEFICIAL SHAREHOLDERS WILL BE ENTITLED TO ASSERT
DISSENTERS' RIGHTS UNDER SECTIONS 180.1301 THROUGH 180.1331 OF THE WISCONSIN
BUSINESS CORPORATION LAW ("WBCL"). SHAREHOLDERS SHOULD READ THE INFORMATION
STATEMENT AND ANNEX IV THERETO FOR A DESCRIPTION OF ALL STATUTORY PROVISIONS
RELATED TO DISSENTERS' RIGHTS.
You should not send any Share certificates at this time. You will receive a
letter of transmittal following the consummation of the Merger. The letter of
transmittal will give you instructions on where to send your Share certificates.
NEITHER THE COMPANY NOR ITS MANAGEMENT IS SOLICITING YOUR PROXY.
By Order of the Board of Directors,
/s/ Maurice J. McSweeney
Maurice J. McSweeney
Secretary
Waukesha, Wisconsin
June 18, 1998
<PAGE> 4
HEIN-WERNER CORPORATION
2120 PEWAUKEE ROAD
WAUKESHA, WISCONSIN 53188
------------------------------------------
INFORMATION STATEMENT
------------------------------------------
This Information Statement is being furnished to holders of common stock,
par value $1.00 per share (the "Common Stock"), of Hein-Werner Corporation, a
Wisconsin corporation (the "Company"), including the associated common share
purchase rights (the "Rights" and, together with the Common Sock, the "Shares"),
in connection with the proposed merger (the "Merger") of Snap-on Pace Company, a
Wisconsin corporation (the "Purchaser") and an indirect wholly-owned subsidiary
of Snap-on Incorporated, a Delaware corporation (the "Parent"), with and into
the Company, as contemplated by that certain Agreement and Plan of Merger, dated
as of April 27, 1998, among the Purchaser, Parent and the Company (the "Merger
Agreement"). As a result of the Merger, the Company will be the surviving
corporation and will become an indirect wholly-owned subsidiary of Parent. In
the Merger, each outstanding Share (other than Shares held by Parent, the
Purchaser, any wholly-owned subsidiary of Parent or the Purchaser, in the
treasury of the Company or by any wholly-owned subsidiary of the Company, and by
shareholders who perfect their dissenters' rights under Wisconsin law) will be
converted into the right to receive $12.60 in cash, without interest thereon
(the "Merger Consideration"). A copy of the Merger Agreement is attached hereto
as Annex I.
Shareholders are welcome to attend the Special Meeting; however, proxies
are not being solicited for the meeting. If you wish to vote your Shares, you or
your representative must be present in person at the Special Meeting.
The close of business on June 15, 1998 (the "Record Date"), has been fixed
as the record date for the determination of holders of Shares entitled to
receive notice and to vote at the Special Meeting. At such time there were
2,918,899 Shares issued and outstanding. The presence in person or by proxy of
the holders of a majority of the aggregate voting power of the issued and
outstanding Shares will be necessary to constitute a quorum for the transaction
of business at the Special Meeting. The affirmative vote of 66 2/3% of the
aggregate voting power of the issued and outstanding Shares will be necessary to
approve the Merger. Each Share is entitled to one vote, except that the voting
power of Shares held by the Purchaser in excess of 20% of the aggregate voting
power of the outstanding Shares is limited to 10% of the full voting power of
such Shares pursuant to Section 180.1150 of the Wisconsin Business Corporation
Law (the "WBCL"). As a result of the consummation of the Offer (as defined
herein), the Purchaser owns approximately 93.7% of the outstanding Shares and
intends to vote all such Shares for the Merger. Accordingly, the approval of the
Merger Agreement at the Special Meeting is assured without the affirmative vote
of any other shareholder.
YOU ARE URGED TO REVIEW THIS INFORMATION STATEMENT CAREFULLY TO DECIDE
WHETHER TO ACCEPT THE MERGER CONSIDERATION OR TO EXERCISE DISSENTER'S RIGHTS
UNDER SECTIONS 180.1301 THROUGH 180.1331 OF THE WBCL. SEE "DISSENTERS' RIGHTS"
BELOW AND ANNEX IV ATTACHED HERETO FOR A DESCRIPTION OF ALL STATUTORY PROVISIONS
RELATED TO DISSENTERS' RIGHTS.
This Information Statement is first being mailed to shareholders on or
about June 18, 1998, to the holders of record of the Shares at the close of
business on June 15, 1998.
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A
PROXY. PLEASE DO NOT SEND IN ANY OF YOUR SHARE CERTIFICATES AT THIS TIME.
The Information Statement is dated June 18, 1998:
<PAGE> 5
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
SUMMARY..................................................... 1
The Companies............................................. 1
General................................................... 1
Procedure for Receipt of Merger Consideration............. 2
Dissenters' Rights........................................ 2
The Merger................................................ 2
Source and Amount of Funds................................ 3
Selected Financial Information of the Company............. 3
Price Range of the Shares; Dividends...................... 4
GENERAL..................................................... 6
THE SPECIAL MEETING......................................... 6
PROCEDURE FOR RECEIPT OF MERGER CONSIDERATION............... 7
Surrender and Payment for Shares.......................... 7
Book-Entry Transfer....................................... 8
Signature Guarantees...................................... 8
Determination of Validity................................. 8
Backup Withholding........................................ 8
DISSENTERS' RIGHTS.......................................... 9
THE MERGER.................................................. 10
Background of Offer and the Merger........................ 10
Recommendation of the Board............................... 12
Opinion of Financial Advisor.............................. 13
Purpose of the Merger..................................... 14
Certain Effects of the Offer and the Merger............... 14
Plans for the Company..................................... 14
Interests of Certain Persons in the Merger................ 15
Certain Federal Income Tax Consequences................... 17
Accounting Treatment of the Merger........................ 18
Regulatory and Other Approvals............................ 18
CERTAIN INFORMATION CONCERNING THE COMPANY.................. 19
General................................................... 19
CERTAIN INFORMATION CONCERNING PARENT AND PURCHASER......... 20
THE MERGER AGREEMENT........................................ 20
The Offer................................................. 20
The Merger................................................ 20
Vote Required to Approve the Merger....................... 21
Conditions to the Merger.................................. 21
Directors................................................. 22
Conduct of Business of the Company........................ 22
No Solicitation........................................... 23
Termination............................................... 25
Fees and Expenses......................................... 26
Employee Benefit Arrangements............................. 26
STOCK OPTION AGREEMENT......................................
SOURCE AND AMOUNT OF FUNDS.................................. 27
PRICE RANGE OF SHARES; DIVIDENDS............................ 27
</TABLE>
ii
<PAGE> 6
<TABLE>
<CAPTION>
PAGE
<S> <C>
PRINCIPAL SHAREHOLDERS AND SHARE OWNERSHIP OF MANAGEMENT.... 28
AVAILABLE INFORMATION....................................... 28
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE............. 28
</TABLE>
ANNEXES:
<TABLE>
<S> <C>
Annex I Agreement and Plan of Merger
Annex II Opinion of Financial Advisor
Annex III Directors Designated by Parent
Wisconsin Business Corporation Law, Sections 180.1301
Annex IV through 180.1331
</TABLE>
iii
<PAGE> 7
SUMMARY
The following is a summary of certain information contained elsewhere in
this Information Statement, including the Annexes hereto, or in the documents
incorporated herein by reference. Reference is made to, and this Summary is
qualified in its entirety by, the more detailed information contained in this
Information Statement, in the Annexes hereto and the documents incorporated by
reference herein. Capitalized terms used in this Summary have the meanings
ascribed to them elsewhere in this Information Statement. SHAREHOLDERS ARE URGED
TO READ THIS INFORMATION STATEMENT AND THE ANNEXES HERETO IN THEIR ENTIRETY.
THE COMPANIES
The Company. The Company designs, manufactures, markets and sells
proprietary collision repair equipment worldwide, with operations centered in
North America and Europe. The Company is a Wisconsin corporation with its
principal executive offices at 2120 Pewaukee Road, Waukesha, Wisconsin 53188.
The telephone number of the Company at such location is (414) 542-6611. For
further information concerning the Company, see "CERTAIN INFORMATION CONCERNING
THE COMPANY," "AVAILABLE INFORMATION" and "INCORPORATION OF CERTAIN DOCUMENTS BY
REFERENCE."
Parent. Parent is a leading manufacturer and distributor of high-quality
hand tools, power tools, tool storage products, diagnostic equipment, shop
equipment, emissions/safety equipment, collision repair equipment and systems,
diagnostics software, business management software for automotive repair shops
and related products and services. Parent's mission is to create value by
providing innovative solutions to the transportation service and industrial
markets worldwide; therefore, Parent's products and services are used mainly by
professional technicians and managers in vehicle service and industrial
applications. Customers include professional technicians, independent automotive
repair and body shops, franchised service centers, speciality repair shops,
automotive dealerships, vehicle manufacturers, industrial and government
entities and other professional tool and equipment users.
The Purchaser. The Purchaser is a newly incorporated Wisconsin corporation
organized in connection with the Offer and the Merger and has not carried on any
activities other than in connection with the Offer and the Merger. All of the
outstanding capital stock of the Purchaser is owned indirectly by Parent. It is
not anticipated that the Purchaser will have any significant assets or
liabilities or engage in activities other than those incident to its formation
and capitalization and the transactions contemplated by the Offer and the
Merger.
The principal offices of Parent and the Purchaser are located at 10801
Corporate Drive, Kenosha, Wisconsin 53141-1430. The telephone number of Parent
and the Purchaser at such location is (414) 656-5200. For further information
concerning Parent and the Purchaser, see "CERTAIN INFORMATION CONCERNING PARENT
AND THE PURCHASER" and "AVAILABLE INFORMATION."
GENERAL
This Information Statement is being delivered in connection with the
proposed merger (the "Merger") of the Purchaser with and into the Company. As a
result of the Merger, the Company will be the surviving corporation (the
"Surviving Corporation") and will become an indirect wholly-owned subsidiary of
Parent. In the Merger, each outstanding Share (other than Shares held by Parent,
the Purchaser, any wholly-owned subsidiary of Parent or the Purchaser, in the
treasury of the Company or by any wholly-owned subsidiary of the Company, and by
shareholders who perfect their dissenters' rights under Wisconsin law) will be
converted into the right to receive $12.60 in cash, without interest thereon
(the "Merger Consideration"). A copy of the Merger Agreement is attached hereto
as Annex I.
Pursuant to the Merger Agreement, the Purchaser commenced a cash tender
offer on May 4, 1998, for all outstanding Shares, at a price of $12.60 per
Share, net to the seller in cash (the "Offer"). The Offer expired at 12:00
midnight, New York City time, on Monday, June 1, 1998. At such time, Purchaser
accepted for payment approximately 2,737,030 Shares validly tendered and not
withdrawn. This amount represents approximately 93.7% of the issued and
outstanding Shares.
<PAGE> 8
PROCEDURE FOR RECEIPT OF MERGER CONSIDERATION
Following the consummation of the Merger, a form of letter of transmittal
and instructions for use in effecting the surrender of the Shares for payment
will be sent under separate cover to all holders of Shares outstanding
immediately prior to the Merger. The letter of transmittal must be completed as
directed and returned with certificates representing such Shares, or such Shares
must be delivered by book-entry transfer. Checks for the Merger Consideration
will be sent to shareholders as soon as practicable after receipt of the letters
of transmittal and the certificates or Shares, as applicable. See "PROCEDURE FOR
RECEIPT OF MERGER CONSIDERATION."
DISSENTERS' RIGHTS
Under the WBCL, holders of Shares who do not vote to approve the Merger and
who otherwise strictly comply with the applicable requirements of the WBCL may
have the right to dissent from the Merger and demand payment in cash of the
"fair value" of their Shares. See "DISSENTERS' RIGHTS" and Annex IV hereto.
THE MERGER
Background to the Offer and the Merger. For a description of events
leading to the approval of the Merger Agreement by the Board of Directors of the
Company, see "THE MERGER -- Background to the Offer and the Merger."
Approval of the Board. On April 27, 1998, the Board of Directors of the
Company (the "Company Board") unanimously approved the Offer and the Merger and
determined that the terms of the Offer and the Merger are fair to, and in the
best interests of, the Company's shareholders, and unanimously recommended that
the Company's shareholders accept the Offer and tender all of their Shares
thereunder and approve and adopt the Merger Agreement and the Merger. See "THE
MERGER -- Recommendation of the Board of Directors."
Interest of Certain Persons in the Merger. Certain existing and former
members of the Company's management and the Company Board (as well as employees
of the Company) have interests in the Merger other than as shareholders relating
to, among other things, (i) the acceleration of the exercisability of
outstanding options to purchase Shares and the exchange of outstanding options
for a cash payment and (ii) the terms of certain severance agreements between
the Company and certain executive officers, providing for cash payments and
other benefits upon and, under certain circumstances, following a change of
control of the Company (which would include the Offer and the Merger). See "THE
MERGER -- Interests of Certain Persons in the Merger."
Opinion of Financial Advisor. Credit Suisse First Boston ("CSFB") acted as
financial advisor to the Company in connection with the Offer and the Merger and
delivered its written opinion dated April 27, 1998 to the Company that, as of
the date of such opinion, the cash consideration to be received by the
shareholders of the Company in the Offer and the Merger was fair to such
shareholders from a financial point of view. The full text of the CSFB opinion
is set forth in Annex II hereto and is incorporated herein by reference.
Shareholders are urged to read the CSFB opinion carefully and in its entirety.
See "THE MERGER -- Opinion of Financial Advisor."
Purpose of the Merger. The purpose of the Merger is to enable Parent,
through the Purchaser, to acquire the remaining equity interest in the Company
not currently owned by Purchaser. The first step in the acquisition of the
Company was the Offer by the Purchaser to acquire all of the outstanding Shares.
The Merger, as the second step, is intended to complete the acquisition of any
Shares not acquired by the Purchaser in the Offer. See "THE MERGER -- Purpose of
the Merger."
Conditions to the Merger. The respective obligations of Parent, the
Purchaser and the Company to consummate the Merger and the transactions
contemplated thereby are subject to the satisfaction or waiver in writing, at or
before the Effective Time, of certain conditions, including: (i) to the extent
required under the Company's articles of incorporation or applicable law, the
shareholders of the Company shall have duly
2
<PAGE> 9
approved the transactions contemplated by the Merger Agreement; and (ii) the
consummation of the Merger shall not be restrained, enjoined or prohibited by
any order, judgment, decree, injunction or ruling of a court of competent
jurisdiction or any governmental entity, and there shall not have been any
statute, rule or regulation enacted, promulgated or deemed applicable to the
Merger by any governmental entity that prevents the consummation of the Merger.
See "THE MERGER AGREEMENT -- Conditions to the Merger."
Certain Federal Income Tax Consequences. The exchange of Shares for cash,
pursuant to the Merger, will be a taxable transaction for federal income tax
purposes and may also be taxable under applicable state, local and other tax
laws. See "THE MERGER -- Certain Tax Consequences of the Merger."
Regulatory Matters. The waiting period under the Hart-Scott-Rodino Act was
terminated on May 23, 1998. Parent received clearance from the German Federal
Cartel Office to consummate the Offer and the Merger on May 29, 1998. No other
regulatory approval is required for the Merger. See "THE MERGER -- Regulatory
Matters."
SOURCE AND AMOUNT OF FUNDS
Parent has estimated that the total amount of funds required by the
Purchaser to purchase all of the outstanding Shares pursuant to the Offer and
the Merger and to pay related fees and expenses, will be approximately $44
million. Of such amount, approximately $34.49 million was used to purchase
Shares tendered pursuant to the Offer. The funding of the Offer has been, and
the funding of the Merger will be, obtained from available borrowings under
Parent's existing unsecured lines of credit and working capital. See "SOURCE AND
AMOUNT OF FUNDS."
SELECTED FINANCIAL INFORMATION OF THE COMPANY
Set forth below is certain summary consolidated financial data for the
Company's last three fiscal years, as contained in the Company's Annual Report
on Form 10-K for the fiscal year ended December 31, 1997, as well as the
Company's Quarterly Report on Form 10-Q for the fiscal quarter ended March 28,
1998. More comprehensive financial information is included in such reports and
other documents filed by the Company with the Securities and Exchange Commission
(the "Commission") and incorporated herein by reference, and the following
summary consolidated financial data are qualified in their entirety by reference
to such reports and such other documents and all the financial information
(including any related notes) contained therein. Such reports and other
documents are available for inspection, and copies thereof are obtainable in the
manner set forth below under "AVAILABLE INFORMATION" and "INCORPORATION OF
CERTAIN DOCUMENTS BY REFERENCE."
3
<PAGE> 10
HEIN-WERNER CORPORATION
SELECTED CONSOLIDATED FINANCIAL DATA
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
FISCAL YEARS ENDED DECEMBER 31, ---------------------
--------------------------------- MARCH 28, MARCH 29,
1997 1996 1995 1998 1997
--------- --------- --------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Income Statement of Data
Net sales from continuing operations....... $39,037 $41,696 $41,819 $ 8,873 $ 9,599
Net income from continuing operations...... 1,337 1,908 892 221 351
Net income................................. 6,299 2,176 1,013 221 270
Earnings per share from continuing
operations -- basic..................... 0.46 0.66 0.31 0.08 0.12
Earnings per share -- basic................ 2.17 0.75 0.35 0.08 0.09
Earnings per share from continuing
operations -- diluted................... 0.42 0.57 0.26 0.08 0.11
Earnings per share -- diluted.............. 1.96 0.69 0.32 0.08 0.09
</TABLE>
- ---------------
(1) Per share data has been restated to give effect to stock dividends paid
through January 23, 1998.
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------- MARCH 28, MARCH 29,
1997 1996 1995 1998 1997
------- ------- ------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Balance Sheet Data
Total assets............................... $37,348 $45,598 $49,657 $35,267 $42,782
Long-term debt, excluding current
installments............................ 310 10,161 10,902 267 10,549
Cash dividends declared per common share..... $ -- $ -- $ -- $ -- $ --
</TABLE>
PRICE RANGE OF THE SHARES; DIVIDENDS
The Shares are currently listed on American Stock Exchange (the "AMEX")
under the symbol "HNW." The following table sets forth, for each of the periods
indicated, the high and low sales price per Share on the AMEX.
<TABLE>
<CAPTION>
HIGH LOW
-------- ------
<S> <C> <C>
1996
First Quarter............................................. $ 6.375 $4.250
Second Quarter............................................ 8.750 5.813
Third Quarter............................................. 8.000 5.750
Fourth Quarter............................................ 7.250 6.250
1997
First Quarter............................................. $ 7.500 $6.375
Second Quarter............................................ 8.250 6.375
Third Quarter............................................. 8.375 7.250
Fourth Quarter............................................ 8.375 6.875
1998
First Quarter............................................. $ 8.063 $6.375
Second Quarter (through June 16, 1998).................... 12.563 6.438
</TABLE>
4
<PAGE> 11
On April 27, 1998, the last full trading day prior to the public
announcement of the execution of the Merger Agreement by the Company, Parent and
the Purchaser, the closing sales price of the Shares on the AMEX was $8.250 per
Share. On May 1, 1998, the last full trading day prior to the commencement of
the Offer, the closing sales price of the Shares on the AMEX was $12.438 per
Share and on June 16, 1998, the last full trading day prior to the printing of
this Information Statement, the closing sales price of the Shares on the AMEX
was $12.438 per share.
The Company paid a 5% stock dividend on (i) January 24, 1997 to
shareholders of record on January 3, 1997 and (ii) January 23, 1998 to
shareholders of record on January 2, 1998. The Company's current credit
agreement contains a restriction against the payment of cash dividends. The
Merger Agreement provides that, without the prior written consent of Parent, the
Company will not declare, set aside or pay any dividend on or make any other
distribution in respect of its capital stock.
SHAREHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR THE SHARES.
5
<PAGE> 12
GENERAL
This Information Statement is being delivered in connection with the
proposed merger of Purchaser with and into the Company. As a result of the
Merger, the Company will become an indirect wholly-owned subsidiary of Parent,
and each outstanding Share (other than Shares held by Parent, the Purchaser, any
wholly-owned subsidiary of Parent or the Purchaser, in the treasury of the
Company or by any wholly-owned subsidiary of the Company, and by shareholders
who perfect their dissenters' rights under Wisconsin law) will be converted into
the right to receive $12.60 in cash, without interest thereon. A copy of the
Merger Agreement is attached hereto as Annex I.
The Merger is the second and final step in the acquisition of the Company
by Parent. The first step was a tender offer by Purchaser to acquire all of the
outstanding Shares at $12.60 per Share, net to the seller in cash. The Offer has
been completed, and Purchaser accepted for payment approximately 2,737,030
Shares validly tendered and not withdrawn. This amount represents approximately
93.7% of the issued and outstanding Shares. The Merger is intended to complete
the acquisition of any Shares not acquired by Purchaser pursuant to the Offer.
THE SPECIAL MEETING
The Special Meeting will be held at 9:00 a.m., local time, on July 17,
1998, at 2120 Pewaukee Road, Waukesha, Wisconsin 53188, for the purpose of
approving the Merger Agreement, as required under the WBCL.
At the date of this Information Statement, the Company Board does not know
of any business to be presented at the Special Meeting other than as set forth
in the notice accompanying this Information Statement.
Only holders of record of Shares outstanding at the close of business on
June 15, 1998 (the "Record Date") are entitled to vote at the Special Meeting.
On the Record Date, there were approximately 376 holders of record, with
2,918,899 Shares issued and outstanding. The presence in person or by proxy of
the holders of a majority of the aggregate voting power of the aggregate voting
power of the Shares outstanding will be necessary to constitute a quorum for the
transaction of business at the Special Meeting. Under the WBCL, the affirmative
vote of 66 2/3% of the aggregate voting power of the issued and outstanding
Shares will be necessary to approve the Merger. Each Share is entitled to one
vote, except that the voting power of Shares held by the Purchaser in excess of
20% of the aggregate voting power of the outstanding Shares is limited to 10% of
the full voting power of such Shares pursuant to Section 180.1150 of the WBCL.
As a result of the consummation of the Offer, Purchaser owns approximately 93.7%
of the outstanding Shares and intends to vote all such Shares for the Merger.
Accordingly, the approval of the Merger Agreement at the Special Meeting is
assured without the affirmative vote of any other shareholder.
SHAREHOLDERS ARE ENTITLED TO EXERCISE DISSENTERS' RIGHTS UNDER THE WBCL AS
A RESULT OF THE MERGER. SEE "DISSENTERS' RIGHTS" AND ANNEX IV HERETO.
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PROCEDURE FOR RECEIPT OF MERGER CONSIDERATION
SURRENDER AND PAYMENT FOR SHARES
The Company has designated Firstar Trust Company to act as Paying Agent
(the "Paying Agent") under the Merger Agreement. At the effective time of the
Merger (the "Effective Time"), Parent will make available to the Paying Agent,
for the benefit of the holders of outstanding Shares, the funds necessary to
make the payments due to such holders.
As soon as reasonably practicable after the Effective Time, the Paying
Agent will mail to each holder of a certificate which immediately prior to the
Effective Time represented outstanding Shares (the "Certificates"), (i) a form
of letter of transmittal specifying that delivery will be effected, and risk of
loss and title to such Certificate will pass, only upon proper delivery of such
Certificate to the Paying Agent and (ii) instructions for use in effecting the
surrender of the Certificates for payment therefor. For a shareholder to validly
surrender Shares pursuant to the Merger, a Certificate for surrendered Shares,
together with a properly completed and duly executed letter of transmittal and
any other required documents, must be received by the Paying Agent at one of its
addresses set forth on the letter of transmittal or such Shares must be
delivered pursuant to the procedure for book-entry transfer set forth below (and
a Book-Entry Confirmation (as defined below) must be received by the Paying
Agent). Until surrendered, such Certificates will represent solely the right to
receive the Merger Consideration with respect to each of the Shares represented
thereby. If payment is to be made to a person other than the person in whose
name a Certificate so surrendered is registered, it shall be a condition of
payment that the Certificate so surrendered shall be properly endorsed and
otherwise in proper form for transfer and that the person requesting such
payment shall pay to the Paying Agent any transfer or other taxes required by
reason of the payment to a person other than the registered holder of the
Certificate surrendered, or shall establish to the satisfaction of the Paying
Agent that such tax has been paid or is not applicable. The Surviving
Corporation or the Paying Agent will be entitled to deduct and withhold from the
Merger Consideration otherwise payable to any holder of Shares pursuant to the
Merger Agreement, such amounts as are required to be deducted and withheld under
any provision of Federal, state, local or foreign tax law with respect to the
making of such payment. To the extent that amounts are so withheld, such amounts
will be treated for all purposes as having been paid to the shareholder in
respect of whom such deduction and withholding was made by the Surviving
Corporation or the Paying Agent. In no event will the holder of any surrendered
Certificate be entitled to receive interest on any of the Merger Consideration.
None of the Paying Agent, the Company, Parent or Purchaser will be liable to a
holder of Shares for any amount paid to a public official pursuant to any
applicable abandoned property, escheat or similar law.
If any Certificate has been lost, stolen or destroyed, upon the making of
an affidavit of that fact by the person claiming such Certificate to be lost,
stolen or destroyed and, if required by Parent, the posting by such person of a
bond in such reasonable amount as Parent may direct as indemnity against any
claim that may be made against it with respect to such Certificate, the Paying
Agent will issue in exchange for such lost, stolen or destroyed Certificate, the
Merger Consideration to which the holder is entitled to receive pursuant to the
Merger Agreement.
Pursuant to the Merger Agreement, any portion of the funds made available
to the Paying Agent for the payment of Merger Consideration which remains
unclaimed by the holders of Shares one year after the Effective Time, will be
delivered to Parent upon demand of Parent, and any former shareholders of the
Company will thereafter look only to Parent for payment of their claim for the
Merger Consideration for the Shares.
At the Effective Time, the stock transfer books of the Company will be
closed, and no transfer of Shares will thereafter be made. Subject to any
applicable abandoned property, escheat or similar laws, if after the Effective
Time, Certificates are presented to the Surviving Corporation for transfer, they
will be canceled and exchanged as described in the preceding paragraphs.
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BOOK-ENTRY TRANSFER
The Paying Agent will establish an account with respect to the Shares at
The Depository Trust Company and the Philadelphia Securities Depository Trust
Company (the "Book-Entry Transfer Facilities") for purposes of the Merger. Any
financial institution that is a participant in any of the Book-Entry Transfer
Facilities' systems may make book-entry delivery of Shares by causing a
Book-Entry Transfer Facility to transfer such Shares into the Paying Agent's
account in accordance with such Book-Entry Transfer Facility's procedures for
transfer. However, although delivery of Shares may be effected through
book-entry transfer into the Paying Agent's account at a Book-Entry Transfer
Facility, the letter of transmittal (or facsimile thereof), properly completed
and duly executed, with any required signature guarantees and any other required
documents, must, in any case, be transmitted to, and received by, the Paying
Agent at one of its addresses set forth on the transmittal letter, or the
surrendering shareholder must comply with the guaranteed delivery procedure
described below. The confirmation of a book-entry transfer of Shares into the
Paying Agent's account at a Book-Entry Transfer Facility as described above is
referred to herein as a "Book-Entry Confirmation." Delivery of documents to a
Book-Entry Transfer Facility in accordance with such Book-Entry Transfer
Facility's procedures does not constitute delivery to the Paying Agent.
THE METHOD OF DELIVERY OF SHARES, THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF THE SURRENDERING SHAREHOLDER.
IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY
INSURED, IS RECOMMENDED.
SIGNATURE GUARANTEES
Except as otherwise provided below, all signatures on a letter of
transmittal must be guaranteed by a financial institution (including most
commercial banks, savings and loan associations and brokerage houses) that is a
participant in the Security Transfer Agent Medallion Program, the New York Stock
Exchange Medallion Signature Guarantee Program or the Stock Exchange Medallion
Program (an "Eligible Institution"). Signatures on the letter of transmittal
need not be guaranteed (a) if the letter of transmittal is signed by the
registered holder (which term, for purposes of this section, includes any
participant in any of the Book-Entry Transfer Facilities' systems whose name
appears on a security position listing as the owner of the Shares) of Shares
surrendered therewith and such registered holder has not completed the box
entitled "Special Payment Instructions" or the box entitled "Special Delivery
Instructions" on the letter of transmittal or (b) if such Shares are surrendered
for the account of an Eligible Institution. If the Certificates are registered
in the name of a person other than the signer of the letter of transmittal, or
if payment is to be made or Certificates not surrendered or not accepted for
payment are to be returned to a person other than the registered holder of such
Certificates, then the surrendered Certificates must be endorsed or accompanied
by appropriate stock powers, in either case signed exactly as the name of the
registered holders or owners appear on the Certificates, with the signatures on
the Certificates or stock powers guaranteed as described above.
DETERMINATION OF VALIDITY
All questions as to the validity, form, eligibility and acceptance of any
surrender of Certificates will be determined by Parent in its sole discretion,
which determination will be final and binding.
BACKUP WITHHOLDING
In order to avoid "backup withholding" of Federal income tax on payments of
cash pursuant to the Merger, a shareholder surrendering Certificates in the
Merger must provide the Paying Agent with such shareholder's correct taxpayer
identification number ("TIN") on a Substitute Form W-9 and certify under
penalties of perjury that such TIN is correct and that such shareholder is not
subject to backup withholding. Certain shareholders (including, among others,
all corporations and certain foreign individuals and entities) are not subject
to backup withholding. If a shareholder does not provide its correct TIN or
fails to provide the certifications described above, the Internal Revenue
Service ("IRS") may impose a penalty on such shareholder and payment of cash to
such shareholder pursuant to the Offer may be subject to backup
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withholding of 31%. All shareholders surrendering Shares pursuant to the Merger
should complete and sign the main signature form and the Substitute Form W-9
included as part of the letter of transmittal to provide the information and
certification necessary to avoid backup withholding (unless an applicable
exemption exists and is proved in a manner satisfactory to Parent and the Paying
Agent). Noncorporate foreign shareholders should complete and sign the main
signature form and a Form W-8, Certificate of Foreign Status, a copy of which
may be obtained from the Paying Agent, in order to avoid backup withholding.
DISSENTERS' RIGHTS
Under Sections 180.1301 through 180.1331 of the WBCL, dissenters' rights
may be available to holders of Shares and beneficial shareholders (each a
"Dissenting Shareholder"), subject to the procedures described therein, to
object to the Merger and demand payment of the "fair value" of their Shares in
cash in connection with the consummation of the Merger. Dissenters' rights are
available if the Merger is a "business combination" (as defined in Section
180.1130(3) of the WBCL), or if the Shares are not registered on a national
securities exchange or quoted on the Nasdaq National Market on the record date
for notice to the shareholders of a special meeting to vote on the Merger. If
the Merger is a "business combination" and dissenters' rights are available, the
"fair value" of the Shares will be determined pursuant to Section 180.1130(9)(a)
of the WBCL with reference to the public market price of the Shares if
available, or otherwise as determined in good faith by the Company's Board of
Directors. The "fair value," as so determined, could be more or less than the
value per Share to be paid pursuant to Offer and the Merger.
On the Record Date, the Merger qualified as "business combination" under
the WBCL and shareholders of the Company therefore have the right to dissent
from the Merger Agreement. To receive in cash the fair value of their Shares,
such Dissenting Shareholders are required to follow certain procedures set forth
in the WBCL. The following is a brief summary of such procedures, which does not
purport to be complete and is qualified by reference to the actual statutes.
HOLDERS OF SHARES SHOULD READ ANNEX IV HERETO FOR A DESCRIPTION OF ALL STATUTORY
PROVISIONS RELATED TO DISSENTERS' RIGHTS.
Pursuant to Section 180.1321 of the WBCL, any owner or beneficial owner of
Shares desiring to assert dissenters' rights shall do all of the following: (i)
deliver to the Company, before the vote to approve the Merger Agreement is
taken, written objection to the Merger Agreement which includes such Dissenting
Shareholder's intent to demand payment for such Shares if the proposed Merger
Agreement is effectuated, and (ii) not vote in favor of the Merger Agreement. A
Dissenting Shareholder who fails to satisfy both (i) and (ii) above is not
entitled to payment for such Shares by the Company. A Dissenting Shareholder may
object to the Merger Agreement with respect to less than all of such Shares.
Company shareholders who wish to object must file written objections with the
Company by mail, or by delivery in person to the principal office of the
Company. Within ten (10) days after the Merger Agreement is approved at the
Special Meeting, the Company will deliver a written dissenters' notice to each
of its shareholders who has dissented to the Merger Agreement in accordance with
Section 180.1321 of the WBCL. Upon receipt of such notice, each Dissenting
Shareholder has thirty (30) days to demand payment in writing and surrender the
certificate or certificates representing such Shares with respect to which he or
she has dissented. A Dissenting Shareholder who does not demand payment within
the designated time period is not entitled to payment for his or her shares and
shall be bound by the Merger Agreement. Upon receipt of a payment demand or on
the day of the consummation of the Merger, whichever is later, the Company shall
pay each Dissenting Shareholder who has demanded payment the amount that the
Company estimates to be the fair value of such Shares, plus accrued interest. A
Dissenting Shareholder, who does not agree with the Company's estimation of the
fair value of his or her shares or the amount of interest due, must notify the
Company of his or her estimate within (30) days after the Company made or
offered payment for such Shares. If the Dissenting Shareholder and the Company
cannot agree upon the fair value of the Shares or amount of interest due, the
Company must file a petition in any court of competent jurisdiction in the
county in which its principal office is located, requesting a finding and
determination of the fair value of such Shares and the accrued interest thereon.
If the Company fails to institute such a proceeding within sixty (60) days after
the Dissenting Shareholder notifies the Company of
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his or her disagreement, the Company shall pay each of its dissenters whose
demand remains unsettled, the amount demanded by such shareholder.
THE MERGER
BACKGROUND OF OFFER AND THE MERGER
From time to time over the last several years, Robert A. Cornog, Chairman,
President and Chief Executive Officer of Parent, contacted Joseph L. Dindorf,
President and Chief Executive Officer of the Company, to express Parent's
interest in exploring the possibility of a business combination with the
Company. On these occasions, Mr. Dindorf indicated that the Company was not then
considering a sale or other extraordinary corporate transaction.
In early 1996, Parent and the Company began preliminary discussions
regarding the possibility of a potential business combination and, in connection
therewith, entered into a confidentiality agreement under which Parent was
furnished with certain limited financial and business information concerning the
Company. During the period from November 1995 through April 1996,
representatives of Parent held various discussions with Mr. Dindorf during which
Mr. Dindorf responded to various questions from representatives of Parent. In
July 1996, the Company and Parent agreed to terminate these preliminary
discussions.
Prior to and following the termination of the foregoing discussions, the
Company analyzed various potential strategic options that might be available to
the Company, including possible divestitures of one or more of its operating
divisions and possible business combinations or alliances with other
manufacturing companies. In 1997, pursuant to the Company's long-range
restructuring plan, the Company sold its Great Bend Industries Division and its
Winona Van Norman Division, used the proceeds of such divestitures to pay off
virtually all of its debt and hired an outside consultant to assist the Company
with strategic planning and the evaluation of acquisition candidates.
On March 3, 1998, Mr. Cornog called Mr. Dindorf to express Parent's renewed
interest in exploring a possible business combination with the Company and his
willingness to meet and discuss the terms of such a possible transaction. Mr.
Dindorf reiterated that the Company was not considering a sale and declined to
meet with Mr. Cornog, but said he would discuss with the Board of Directors of
the Company the possibility of having a meeting. Following this conversation,
Mr. Cornog sent Mr. Dindorf a letter again expressing Parent's interest
regarding a potential business combination with the Company.
On March 12, 1998, a meeting of the Board of Directors of the Company was
held during which Mr. Dindorf informed the Company's Board of Directors of his
conversation with Mr. Cornog. After reviewing various matters, including the
Company's recent financial performance and its long-range strategic plan, the
Board of Directors of the Company directed Mr. Dindorf to advise Parent that the
Company was not currently interested in pursuing a business combination and that
the Board of Directors of the Company had determined that it was in the best
long-term interests of the Company's shareholders for the Company to carry out
its long-range restructuring plan. On March 19, 1998, Mr. Dindorf reported to
representatives of Parent the decision of the Company's Board of Directors.
On March 27, 1998, notwithstanding the Company's prior communication, Mr.
Cornog telephoned Mr. Dindorf and expressed a strong interest in Parent
effecting a business combination with the Company at a significant premium above
the Company's current market price. After discussing the matter with the
Company's directors, Mr. Dindorf agreed to a meeting with Mr. Cornog. On March
30, 1998, Messrs. Cornog and Dindorf met and discussed a variety of issues
regarding a possible business combination, including a preliminary range of
possible values. At the conclusion of the meeting, Mr. Dindorf agreed to convene
a meeting of the Company's Board of Directors to consider Parent's expression of
interest.
On April 3, 1998, the Company's Board of Directors received a letter from
Parent setting forth a preliminary proposal pursuant to which Parent would
acquire all of the shares of the Company for $11.75 per share in cash. On that
same day, the Board of Directors of the Company met and reviewed with management
and the Company's outside counsel, Foley & Lardner, the options available to the
Company. At the
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conclusion of the meeting, the Board of Directors of the Company directed
management to retain CSFB as the Company's financial advisor to assist the Board
in evaluating Parent's offer and to explore the Company's strategic
alternatives.
During the course of the next several days, CSFB met with the Company's
management to review various alternatives available to the Company and also
compiled, with the assistance of the Company's management, a list of entities
that, in addition to Parent, may have an interest in effecting a business
combination with the Company. Thereafter, CSFB contacted the various entities
identified by Company management and CSFB to determine their interest in
effecting a business combination with the Company. Following several preliminary
discussions, each of the entities contacted ultimately advised CSFB that it was
not presently interested in pursuing such a business combination. During this
time, CSFB also engaged in discussions with Parent's financial advisors
regarding a potential transaction with Parent.
On April 15, 1998, the Board of Directors of the Company met to discuss the
status of discussions with the various parties contacted by CSFB as well as the
discussions between Parent and the Company. CSFB and the Company's management
reviewed with the directors the steps taken to date. At this meeting, CSFB
reported to the Board of Directors on various financial analyses it had
undertaken and Foley & Lardner reviewed with the directors their fiduciary
duties in connection with the consideration of a business combination. At the
conclusion of the meeting, the Board authorized the Company and its
representatives to pursue a negotiated transaction with Parent and Foley &
Lardner was directed to prepare a draft merger agreement for transmittal to
Parent providing for Parent's acquisition of the Company for cash. On April 17,
1998, a draft of such an agreement was provided to Parent. At the April 15
meeting, the Board of Directors also approved the extension of employment and
severance agreements to selected key employees of the Company.
Thereafter, representatives of Parent and representatives of the Company as
well as Parent's and the Company's respective legal and financial advisors
continued to discuss a possible business combination and negotiate the terms of
a definitive merger agreement. During this period, the Company's management kept
the Board of Directors of the Company informed of the ongoing discussions.
On April 22, 1998, the Board of Directors of the Company met and CSFB and
Foley & Lardner updated the Board on the status of discussions between
representatives of Parent and the Company. In addition, Foley & Lardner reviewed
with the Board the principal terms of the draft agreement that had been provided
to Parent.
Beginning on April 23, 1998 and through the afternoon of April 27, 1998,
representatives of the Company and the Company's legal advisors met with
representatives of Parent and Parent's legal advisors to negotiate the terms of
a definitive merger agreement and the related agreements. Following execution of
a confidentiality agreement, on April 23, 1998, representatives of Parent met
with certain members of senior management of the Company to discuss certain due
diligence matters. The negotiations among the parties culminated on April 27,
1998 in the Company and Parent agreeing upon a form of definitive merger
agreement and related agreements, subject to approval of the Company's Board of
Directors. On the same date, after agreement was reached on a definitive merger
agreement, Parent and Mr. Dindorf agreed upon the form of a definitive
employment and consulting agreement pursuant to which Mr. Dindorf would remain
employed by the Company following the consummation of the transactions
contemplated by the Merger Agreement.
Later on April 27, 1998, the Board of Directors of the Company met and
reviewed with counsel the final terms of the Merger Agreement, the Stock Option
Agreement and the Employment and Consulting Agreement. Counsel also reviewed
with the directors their fiduciary obligations in connection with the
consideration of a transaction such as the one proposed with Parent. At the
April 27 meeting, CSFB delivered its written opinion to the Company's Board of
Directors to the effect that, as of such date and based upon and subject to the
various considerations set forth in such opinion, the proposed cash purchase
price of $12.60 per share to be received by the shareholders of the Company in
the Offer and the Merger was fair to such shareholders from a financial point of
view. The Board then discussed the presentations it had received at this and
other Board meetings and unanimously approved the Merger Agreement and the Stock
Option Agreement and the transactions contemplated thereby, and authorized their
execution. The Board of Directors
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also unanimously approved the Employment and Consulting Agreement as well as an
amendment to the Change of Control Agreement between the Company and Mr. Dindorf
in order to facilitate Mr. Dindorf's entering into the Employment and Consulting
Agreement.
On April 27, 1998, the Merger Agreement, the Stock Option Agreement, the
Employment and Consulting Agreement and various other transaction documents were
executed.
Following execution of the foregoing documents, a joint press release
announcing the execution of the definitive agreements was issued by Parent and
the Company on April 28, 1998.
On May 4, 1998, Parent and Purchaser commenced the Offer.
The Offer expired on Monday, June 1, 1998, at 12:00 midnight, New York City
time. Pursuant to the Offer, Purchaser accepted for payment and purchased
approximately 2,737,030 Shares, at a price of $12.60 per Share. As a result of
the Offer, Purchaser owns of record approximately 93.7% of the issued and
outstanding Shares, which includes all the Shares held by the directors and
executive officers of the Company prior to the Offer.
Following the consummation of the Offer, pursuant to the Merger Agreement,
O.A. Friend, J.S. Jones, D.J. Schuetz and D.L. Krause resigned as directors of
the Company and B.M. Beronja, D.S. Huml, M.F. Montemurro and S.F. Marrinan, each
an officer of Parent or a subsidiary of Parent, were appointed to the Company
Board to fill the resulting vacancies. Biographical data for B.M. Beronja, D.S.
Huml, M.F. Montemurro and S.F. Marrinan are set forth in Annex III hereto.
RECOMMENDATION OF THE BOARD
Prior to approving the Merger Agreement, the Stock Option Agreement, the
Offer and the Merger, and the other transactions contemplated thereby, the Board
of Directors of the Company held meetings on March 12, April 3, April 15, April
22 and April 27, 1998. At its meeting on April 27, 1998, the Board of Directors
of the Company received final reports from senior management, legal counsel and
CSFB and approved the Merger Agreement, the Stock Option Agreement and the
transactions contemplated thereby. In approving the Merger Agreement, the Stock
Option Agreement and the transactions contemplated thereby and recommending that
the shareholders of the Company tender their Shares pursuant to the Offer, the
Board of Directors of the Company considered a number of factors, including:
1. the financial and other terms of the Offer, the Merger and the
Merger Agreement;
2. the trading price of the Shares over the last five years and that
the $12.60 per Share Offer Price represents a premium of 52.7% over the
closing sales price of the Shares on the American Stock Exchange on April
27, 1998, the last full trading day prior to the public announcement of the
execution of the Merger Agreement;
3. presentations by senior management and CSFB (at such meeting and at
previous meetings of the Board of Directors) regarding the financial
condition, results of operations, business and prospects of the Company;
4. the results of the process undertaken to identify and solicit
indications of interest from other third parties regarding a potential
business combination transaction;
5. the terms and conditions of the Merger Agreement, including
provisions that (i) although prohibiting the Company and its
representatives from soliciting or initiating any Acquisition Transaction,
permit the Company and its representatives to furnish information to, and
negotiate and otherwise engage in discussions with, any third party in
response to an unsolicited written Superior Proposal and (ii) permit the
Company to terminate the Merger Agreement to enter into a definitive
agreement with respect to a Superior Proposal, subject to payment of a
termination fee of $1,000,000 plus reimbursement of out-of-pocket expenses
of Parent and the Purchaser of up to $350,000;
6. Parent's financial condition and ability to cause the Purchaser to
meet its obligations under the Merger Agreement;
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7. the alternatives available to the Company in light of the
consideration proposed to be received for the Shares pursuant to the Offer
and the Merger, including continuing to maintain the Company as an
independent company or engaging in an extraordinary transaction;
8. legal matters relating to the Offer and the Merger, including the
review provided for under the HSR Act with respect to the antitrust
implications of the Offer, and the terms of the Offer and the Merger
Agreement related thereto;
9. the familiarity of the Board of Directors with the business,
results of operations, properties and financial condition of the Company
and the nature of the industry in which it operates;
10. the written opinion of CSFB to the effect of the date of such
opinion, the $12.60 per Share cash consideration to be received by the
shareholders of the Company in the Offer and the Merger is fair to such
shareholders from a financial point of view. A copy of the written opinion
of CSFB dated April 27, 1998, which sets forth the factors considered,
assumptions made and limitations on the review conducted by CSFB, is
attached as Annex II hereto, and is incorporated herein by reference; and
11. the proposed structure of the Offer and the Merger involving an
immediate cash tender offer followed by a merger for the same consideration
and the fact that there is no financing or due diligence contingency to the
Offer. In this connection, the Board of Directors also considered the
likelihood that the proposed acquisition would be consummated, including
the likelihood of satisfaction of the conditions to the Offer and the
Merger contained in the Merger Agreement, and the risks to the Company if
the acquisition were not consummated.
The Board of Directors of the Company evaluated the factors listed above in
light of the directors' knowledge of the business and operations of the Company
and in their business judgment. In view of the variety of factors considered in
connection with its evaluation of the Merger Agreement and the Offer, the Board
of Directors did not find it practicable to, and did not, quantify or otherwise
assign relative weights to the specific factors considered in reaching its
determination. In addition, individual members of the Board of Directors may
have given different weights to different factors. The foregoing discussion of
the information and factors considered and given weight by the Board of
Directors is not intended to be exhaustive.
OPINION OF FINANCIAL ADVISOR
As described above, CSFB delivered its written opinion to the Board on
April 27, 1998, that, based upon and subject to the matters set forth therein
and as of the date thereof, the cash consideration to be received by the
shareholders of the Company in the Offer and the Merger was fair to such
shareholders of the Company from a financial point of view.
A COPY OF THE WRITTEN OPINION OF CSFB, WHICH SETS FORTH THE FACTORS
CONSIDERED, ASSUMPTIONS MADE AND LIMITATIONS ON THE REVIEW CONDUCTED BY CSFB, IS
ATTACHED HERETO AS ANNEX II AND INCORPORATED HEREIN BY REFERENCE.
Pursuant to a letter agreement, dated April 6, 1998 (the "Engagement
Letter"), between the Company and CSFB, the Company engaged CSFB to act as its
exclusive financial advisor to evaluate the Offer and to review financial and
strategic alternatives to maximize the Company's value and, if requested, to
render an opinion regarding the terms of any Sale (as defined in the Engagement
Letter) from a financial point of view. Pursuant to the Engagement Letter, the
Company will pay CSFB for its services in connection with the Offer and the
Merger a transaction fee of $1.0 million. In addition, the Company agreed to
reimburse CSFB for its out-of-pocket expenses including reasonable fees and
expenses of its legal counsel, incurred by CSFB in connection with the
Engagement Letter and to indemnify CSFB against certain liabilities, including
liabilities arising under federal securities laws.
The Company retained CSFB based on its experience and expertise. CSFB is an
internationally recognized investment banking and advisory firm. CSFB, as part
of its investment banking business, is continuously engaged in the evaluation of
businesses and securities in connection with mergers and acquisitions,
negotiated underwritings, competitive biddings, secondary distributions of
listed and unlisted
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securities, private placements and valuations for corporate and other purposes.
In the ordinary course of its business, CSFB and its affiliates may actively
trade the debt and equity securities of both the Company and Parent for its and
its affiliates' own accounts and for the accounts of customers and, accordingly,
may at any time hold a long or short position in such securities.
Except as set forth above, neither the Company nor any person acting on its
behalf has or currently intends to employ, retain or compensate any person to
make solicitations or recommendations to the shareholders of the Company on its
behalf with respect to the Merger.
PURPOSE OF THE MERGER
The purpose of the Merger is to enable Parent, through Purchaser, to
acquire the remaining equity interest in the Company not currently owned by
Purchaser. As a result of the Merger, the Company will become an indirect
wholly-owned subsidiary of Parent, and each outstanding Share will be converted
into the right to receive $12.60 in cash, without interest thereon.
The Merger is the second and final step in the acquisition of the Company
by Parent. The Offer was the first step which resulted in Purchaser owning
approximately 93.7% of the outstanding Shares. The Merger will allow Purchaser
to acquire all outstanding Shares not tendered and purchased pursuant to the
Offer.
The acquisition of the Company has been structured as a cash tender offer
and a cash merger in order to provide a prompt and orderly transfer of ownership
of the Company from the public shareholders of the Company to Parent. The
purchase of Shares pursuant to the Offer increased the likelihood that the
Merger will be consummated.
CERTAIN EFFECTS OF THE OFFER AND THE MERGER
As a result of the Merger, Parent will own indirectly the entire equity
interest in the Company. Therefore, following the Merger, present holders of
Shares will no longer have an equity interest in the Company and will no longer
share in future earnings and potential growth of the Company, if any. Instead
each holder of Shares immediately prior to the Effective Time will have the
right to receive the Merger Consideration to which such holder is entitled under
the Merger Agreement.
Public trading of the Shares on the AMEX will cease immediately following
the Merger. Accordingly, the Shares will no longer meet the quantitative
requirements for continued inclusion on the AMEX and the registration of the
Shares under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), will be terminated upon application of the Company to the Commission. The
termination of registration of the Shares under the Exchange Act will result in
the suspension of the Company's obligation to file reports pursuant to Section
15(d) thereunder.
PLANS FOR THE COMPANY
Upon the consummation of the Merger, the separate existence of the
Purchaser will cease and the Company will continue its existence as the
Surviving Corporation. The Surviving Corporation will retain the name of the
Company and will possess all the rights, privileges, immunities, powers,
liabilities and duties of the Company.
Parent is conducting a detailed review of the Company and its assets,
corporate structure, capitalization, operations, properties, policies,
management and personnel and will consider, subject to the terms of the Merger
Agreement, what, if any, changes would be desirable in light of the
circumstances which exist upon completion of the Merger. Such changes could
include changes in the Company's business, corporate structure, charter, bylaws,
capitalization, Board of Directors, management or dividend policy, although,
except as noted in this Statement, Parent has no current plans with respect to
any such matters.
14
<PAGE> 21
INTERESTS OF CERTAIN PERSONS IN THE MERGER
Certain existing and former members of the Company's management and the
Company Board (as well as other employees of the Company) have certain interests
in the Merger that are described below that are in addition to their interests
as shareholders generally. The Company Board took these interests into account
in approving and adopting the Merger Agreement and the transactions contemplated
thereby.
COMPANY OPTION PLAN
In accordance with the Merger Agreement, the Company took all actions
necessary so that, pursuant to the terms of the Company's 1987 Stock Option and
Incentive Plan (the "Option Plan"), immediately following the date the Shares
were purchased by the Purchaser in the Offer (the "Acceptance Date"), (i) each
outstanding option to purchase Shares (an "Option") granted under the Option
Plan, whether or not then exercisable or vested, became fully exercisable and
vested, (ii) each Option which was then outstanding was cancelled and (iii) in
consideration of such cancellation, immediately following the Acceptance Date,
the Company, pursuant to the terms of the Option Plan, paid to such holders of
Options an amount in respect thereof equal to the product of (x) the excess of
the Offer Price over the exercise price thereof and (y) the number of Shares
subject thereto (net of taxes required by law to be withheld with respect
thereto).
EMPLOYMENT AND CONSULTING AGREEMENT
Parent requested, as an inducement for Parent and the Purchaser to enter
into the Merger Agreement, that Joseph L. Dindorf, President and Chief Executive
Officer of the Company, enter into an Employment and Consulting Agreement (the
"Employment and Consulting Agreement") with Parent and the Company. Such
agreement, which was entered into on April 27, 1998, provides for Mr. Dindorf's
employment by the Company from the Acceptance Date until December 31, 1998 and
for Mr. Dindorf to serve as a consultant thereafter until December 31, 2000. Mr.
Dindorf is entitled to a base salary of $25,000 per month through December 31,
1998 and consulting fees at an annual rate of $250,000 and $200,000 for the
years 1999 and 2000, respectively. Mr. Dindorf is also entitled to certain
fringe benefits. If there is a termination of Mr. Dindorf's services under the
Employment and Consulting Agreement by Mr. Dindorf for good reason or by Parent
other than by reason of death, disability or for cause (as such terms are
defined in the Employment and Consulting Agreement), Mr. Dindorf will be
entitled to a severance payment equal to the aggregate of all unpaid amounts he
would have been entitled to receive under the Employment and Consulting
Agreement as if he had continued in the employ of the Company, and/or had
continued to provide consulting services to the Company, for the remainder of
the employment and/or consulting terms, and he will continue to be entitled to
receive the insurance coverage provided to him and his dependents prior to his
termination for a certain period.
The foregoing is a summary of certain provisions of the Employment and
Consulting Agreement. This summary is not a complete description of the terms
and conditions of the Employment and Consulting Agreement and is qualified in
its entirety by reference to the full text of the Employment and Consulting
Agreement, which is incorporated herein by reference and a copy of which has
been filed with the Commission as an exhibit to the Schedule 14D-9 filed by the
Company on May 4, 1998 (the "Schedule 14D-9").
CHANGE OF CONTROL AGREEMENTS
Since 1984, the Company maintained a Change of Control Agreement with
Joseph L. Dindorf which provided for the payment of certain severance and other
benefits upon termination of the employment of Mr. Dindorf within one or two
years (depending on the circumstances) following a change of control of the
Company. On April 27, 1998, the Board of Directors of the Company approved the
offering to Mr. Dindorf of an amendment to his Change of Control Agreement, and
the Company and Mr. Dindorf subsequently entered into Amendment No. 1 to such
agreement. Pursuant to the amended Change of Control Agreement, Mr. Dindorf will
be entitled to receive a lump-sum cash payment of $995,000 immediately upon a
change of control of the Company. For purposes of this agreement, a change of
control is defined as the acquisition, by any person, organization or
association of persons or organizations of more than 30% of the Shares. The
amended Change of Control Agreement also provides that in the event any portion
of the benefits under the
15
<PAGE> 22
agreement or under any other agreement for Mr. Dindorf would constitute an
"excess parachute payment" for purposes of the Code, benefits will be reduced so
that Mr. Dindorf will be entitled to receive one dollar less than the maximum
amount which he could receive without becoming subject to the 20% excise tax
imposed by the Code or certain excess payments, or which the Company may pay
without loss of deduction under the Code. The acquisition or more than 30% of
the Shares pursuant to the Offer will constitute a change of control for
purposes of the agreement. In connection with the execution of Amendment No. 1
to the Change of Control Agreement, the Company also established and funded a
trust in favor of Mr. Dindorf for the full amount payable under his amended
Change of Control Agreement.
In April 1998, the Company entered into Key Executive Employment and
Severance Agreements with seven officers of the Company (Messrs. Andreoli,
Barthelme, Koons, Liegel, Russell and Wilke and Ms. Kielich) to provide these
executives with a measure of security against changes in their relationship with
the Company in the event of a change in control of the Company. The agreements
provide that each officer covered by the agreements is entitled to benefits if,
within a period between one and two years (depending on which executive is
involved) after a change in control of the Company (as defined in the
agreements), the officer's employment is ended through (i) termination by the
Company, other than by reason of death or disability or for cause (as defined in
the agreements) or (ii) termination by the officer for good reason (as defined
in the agreements). The benefits provided under each agreement are: (i) a
lump-sum cash termination payment of between one and two times (depending on the
executive involved) the sum of the executive officer's annual salary and his or
her highest annual bonus during the three years before the termination or the
effective date of the agreement (or, if higher, the current year's targeted
bonus) and (ii) continuation for up to two years of equivalent hospital,
medical, dental, disability and life insurance coverage as in effect at the time
of termination. The agreements also provide the foregoing benefits in connection
with certain terminations which are effected in anticipation of a change in
control. Each agreement provides that if any portion of the benefits under the
agreement or under any other agreement for the officer would constitute an
"excess parachute payment" for purposes of the Code, benefits will be reduced so
that the officer will be entitled to receive $1 less than the maximum amount
which he or she could receive without becoming subject to the 20% excise tax
imposed by the Code on certain excess payments, or which the Company may pay
without loss of deduction under the Code. The acquisition of more than 25% of
the Shares pursuant to the Offer will constitute a change in control for
purposes of the agreements.
The foregoing are summaries of certain provisions of the amended Change of
Control Agreement with Mr. Dindorf and the Key Executive Employment and
Severance Agreements with seven Company officers (collectively, the "Change of
Control Agreements"). These summaries are not complete descriptions of the terms
and conditions of the Change of Control Agreements and are qualified in their
entirety by reference to the full text of the Change of Control Agreements,
which are incorporated herein by reference and copies of which have been filed
with the Commission as exhibits to the Schedule 14D-9.
EMPLOYEE BENEFIT ARRANGEMENTS
The Merger Agreement provides that, for a period of 18 months following the
Effective Time, Parent shall cause the Surviving Corporation to continue to
provide medical insurance, at COBRA premium rates, to O. Friend, a former
director of the Company.
INDEMNIFICATION AND INSURANCE
Pursuant to the Merger Agreement, Parent and the Purchaser have agreed that
for a period of six years from the Acceptance Date, the Purchaser will maintain
all rights to indemnification now existing in favor of the current or former
directors, officers, employees, fiduciaries and agents of the Company as
provided in the Company's articles of incorporation and by-laws or otherwise in
effect under any agreement on the date of the Merger Agreement. In addition, the
Purchaser and Parent agree that the articles of incorporation and by-laws of the
Surviving Corporation shall contain the provisions with respect to
indemnification set forth in the Company's articles of incorporation and by-laws
on the date of the Merger Agreement, which provisions will not be amended,
repealed or otherwise modified for a period of six years after the Acceptance
Date in any manner that would adversely affect the rights thereunder of
individuals who at any time prior to the Effective
16
<PAGE> 23
Time were directors or officers of the Company in respect of actions or
omissions occurring at or prior to the Effective Time (including, without
limitation, the transactions contemplated by the Merger Agreement), unless such
modification is required by law. Notwithstanding the six-year period specified
in the foregoing sentences, in the event any claim or claims are asserted or
made within such six-year period, all rights to indemnification in respect of
any such claim or claims shall continue until disposition of any and all such
claims.
The Surviving Corporation will at all times exercise the powers granted to
it by its articles of incorporation, its by-laws, and by applicable law to
indemnify and hold harmless to the fullest extent possible present or former
directors, officers, employees, fiduciaries and agents of the Company against
any threatened or actual claim, action, suit, proceeding or investigation made
against them arising from their service in such capacities (or service in such
capacities for another enterprise at the request of the Company) prior to, and
including the Acceptance Date, including, without limitation, with respect to
matters relating to the Merger Agreement.
In addition to the foregoing, Parent agreed that the Company and, from and
after the Acceptance Date, the Surviving Corporation will cause to be maintained
in effect for not less than six years from the Acceptance Date, the current
policies of the directors' and officers' liability insurance maintained by the
Company with respect to matters occurring at or prior to the Effective Time
(including, without limitation, the transactions contemplated by the Merger
Agreement); provided, that the Surviving Corporation will not be required to pay
an annual premium in excess of 200% of the last annual premium paid by the
Company prior to the date of the Merger Agreement and if the Surviving
Corporation is unable to obtain the required insurance it will obtain as much
comparable insurance as possible for an annual premium equal to such maximum
amount.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The receipt of cash for Shares pursuant to the Offer or the Merger will be
a taxable transaction for U.S. federal income tax purposes and also may be a
taxable transaction under state, local or foreign tax laws. Accordingly, a
shareholder who receives cash in exchange for Shares in the Merger (including as
a result of perfecting his dissenters' rights under the WBCL) will recognize
gain or loss for federal income tax purposes equal to the difference, if any,
between the amount of cash received and the shareholder's tax basis in the
Shares sold. Gain or loss will be determined separately for each block of Shares
(i.e., Shares acquired at the same time and price) exchanged pursuant to the
Merger. Such gain or loss generally will be capital gain or loss if the Shares
disposed of were held as capital assets by the shareholder, and will be
long-term capital gain or loss if the Shares disposed of were held for more than
one year on the date of the Merger. In addition, the Taxpayer Relief Act of 1997
could affect the federal income tax consequences of the Merger in that, among
other things, it reduces the maximum rate of federal income tax on capital gains
of individual taxpayers for capital assets held more than 18 months. Shares held
less than one year may be subject to ordinary income tax rates of up to 39.6%
for individuals.
A shareholder (other than certain exempt shareholders including, among
others, all corporations and certain foreign individuals) that surrenders Shares
in the Merger may be subject to 31% backup withholding unless such shareholder
provides its TIN and certifies that such number is correct or properly certifies
that it is awaiting a TIN. A shareholder that does not furnish its TIN may be
subject to a penalty imposed by the Internal Revenue Service (the "IRS"). Each
shareholder should complete and sign the Substitute Form W-9 included as part of
the letter of transmittal so as to provide the information and certification
necessary to avoid backup withholding.
If backup withholding applies to a shareholder, the Paying Agent is
required to withhold 31% from payments to such shareholder. Backup withholding
is not an additional tax. Rather, the amount of the backup withholding can be
credited against the Federal income tax liability of the person subject to the
backup withholding, provided that the required information is given to the IRS.
If backup withholding results in an overpayment of tax, a refund can be obtained
by the shareholder upon filing an income tax return.
The foregoing summary constitutes a general description of certain U.S.
federal income tax consequences of the Merger without regard to the particular
facts and circumstances of each shareholder of the Company
17
<PAGE> 24
and is based on the provisions of the Code, Treasury Department Regulations
issued pursuant thereto and published rulings and court decisions in effect as
of the date hereof, all of which are subject to change, possibly with
retroactive effect. Special tax consequences not described herein may be
applicable to certain shareholders subject to special tax treatment (including
insurance companies, tax-exempt organizations, financial institutions or broker
dealers, foreign shareholders and shareholders who have acquired their Shares
pursuant to the exercise of employee stock options or otherwise as
compensation). ALL SHAREHOLDERS SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT
TO SPECIFIC TAX EFFECTS APPLICABLE TO THEM OF THE MERGER, INCLUDING THE
APPLICABILITY AND EFFECT OF THE ALTERNATIVE MINIMUM TAX AND ANY STATE, LOCAL AND
FOREIGN TAX LAWS.
ACCOUNTING TREATMENT OF THE MERGER
The Merger will be accounted for under the "purchase" method of accounting,
whereby the purchase price for the Company will be allocated to the identifiable
assets and liabilities of the Company and its subsidiaries based on their
respective fair values.
REGULATORY AND OTHER APPROVALS
ANTITRUST
The HSR Act provides that certain acquisition transactions may not be
consummated until information has been furnished to the Antitrust Division of
the Department of Justice (the "Antitrust Division") and to the Pre-merger
Notification Office of the Federal Trade Commission (the "FTC") and certain
waiting period requirements have been satisfied. On May 23, 1998, the waiting
period requirements thereunder were satisfied.
The German Act Against Restraints of Competition ("AARC") similarly
requires that certain information be filed with the German Federal Cartel Office
("FCO") prior to consummation of certain acquisitions. On May 29, 1998, Parent
received notice that the FCO had completed its review of Parent's acquisition of
the Company and provided clearance for the Purchaser to consummate the Offer and
to effect the Merger.
OTHER FEDERAL AND STATE STATUTES
Except for the filing of the Articles of Merger with the Department of
Financial Institutions of the State of Wisconsin, there are no federal or state
regulatory requirements which remain to be complied with in order for the Merger
to be consummated in accordance with the terms of the Merger Agreement.
18
<PAGE> 25
CERTAIN INFORMATION CONCERNING THE COMPANY
GENERAL
The Company designs, manufactures, markets and sells proprietary collision
repair equipment worldwide, with operations centered in North America and in
Europe. The Company is a Wisconsin corporation with its principal executive
offices at 2120 Pewaukee Road, Waukesha, Wisconsin. The telephone number of the
Company at such location is (414) 542-6611.
Set forth below is certain selected consolidated financial data with
respect to the Company, excerpted or derived from the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1997, as well as the Company's
Quarterly Report on Form 10-Q for the quarter ended March 28, 1998, each as
filed with the Commission pursuant to the Exchange Act.
More comprehensive financial information is included in such report and in
other documents filed by the Company with the Commission. The following summary
is qualified in its entirety by reference to such report and other documents and
all of the financial information (including any related notes) contained
therein. Such report and other documents may be inspected and copies may be
obtained from the Commission in the manner set forth under "Available
Information" below.
HEIN-WERNER CORPORATION
SELECTED CONSOLIDATED FINANCIAL DATA
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
FISCAL YEARS ENDED DECEMBER 31, ----------------------
-------------------------------- MARCH 28, MARCH 29,
1997 1996 1995 1998 1997
-------- -------- -------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Income Statement of Data
Net sales from continuing
operations....................... $39,037 $41,696 $41,819 $ 8,873 $ 9,599
Net income from continuing
operations....................... 1,337 1,908 892 221 351
Net income.......................... 6,299 2,176 1,013 221 270
Earnings per share from continuing
operations -- basic.............. 0.46 0.66 0.31 0.08 0.12
Earnings per share -- basic......... 2.17 0.75 0.35 0.08 0.09
Earnings per share from continuing
operations -- diluted............ 0.42 0.57 0.26 0.08 0.11
Earnings per share -- diluted....... 1.96 0.69 0.32 0.08 0.09
</TABLE>
- ---------------
Per share data has been restated to give effect to stock dividends paid through
January 23, 1998.
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------- MARCH 28, MARCH 29,
1997 1996 1995 1998 1997
------- ------- ------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Balance Sheet Data
Total assets........................ $37,348 $45,598 $49,657 $35,267 $42,782
Long-term debt, excluding current
installments..................... 310 10,161 10,902 267 10,549
Cash dividends declared per common
share............................ $ -- $ -- $ -- $ -- $ --
</TABLE>
Additional non-financial information regarding the Company is also included
in the 1997 Form 10-K. Other documents filed by the Company with the Commission
are available for inspection and copies thereof should be obtainable in the
manner set forth above in the section entitled "AVAILABLE INFORMATION" and
"INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE."
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<PAGE> 26
CERTAIN INFORMATION CONCERNING PARENT AND PURCHASER
Parent is a leading manufacturer and distributor of high-quality hand
tools, power tools, tool storage products, diagnostics equipment, shop
equipment, emissions/safety equipment, collision repair equipment and systems,
diagnostics software, business management software for automotive repair shops
and related products and services. Parent's mission is to create value by
providing innovative solutions to the transportation service and industrial
markets worldwide; therefore, Parent's products and services are used mainly by
professional technicians and managers in vehicle service and industrial
applications. Customers include professional technicians, independent automotive
repair and body shops, franchised service centers, specialty repair shops,
automotive dealerships, vehicle manufacturers, industrial and government
entities and other professional tool and equipment users.
The Purchaser is a newly incorporated Wisconsin corporation organized in
connection with the Offer and the Merger and has not carried on any activities
other than in connection with the Offer and the Merger. All of the outstanding
capital stock of the Purchaser is owned indirectly by Parent. Until immediately
prior to the time the Purchaser purchases Shares pursuant to the Offer, it is
not anticipated that the Purchaser will have any significant assets or
liabilities or engage in activities other than those incident to its formation
and capitalization and the transactions contemplated by the Offer and the
Merger.
The principal offices of the Purchaser and Parent are located at 10801
Corporate Drive, Kenosha, Wisconsin 53141-1430. The telephone number of Parent
and the Purchaser at such location is (414) 656-5200.
Parent is subject to the informational requirements of the Exchange Act,
and in accordance therewith, files reports, proxy statements and other
information with the Commission. Such reports, proxy statements and other
information can be inspected and copied at the public reference facilities of
the Commission as set forth under "Available Information."
THE MERGER AGREEMENT
The following is a summary of the material terms of the Merger Agreement.
This summary is not a complete description of the terms and conditions of the
Merger Agreement and is qualified in its entirety by reference to the full text
thereof, which is attached hereto as Annex I. Capitalized terms used and not
otherwise defined herein shall have the meanings assigned to them in the Merger
Agreement.
THE OFFER
The Merger Agreement provides for the commencement of the Offer. Purchaser
commenced the Offer on May 4, 1998. The Offer expired on Monday, June 1, 1998.
At such time, Purchaser accepted for payment approximately 2,737,030 Shares
validly tendered and not withdrawn. This amount represents approximately 93.7%
of the outstanding Shares.
THE MERGER
The Merger Agreement provides that, subject to the terms and conditions
thereof and in accordance with the applicable provisions of the WBCL, at the
Effective Time, the Purchaser will be merged with and into the Company.
Following the Merger, the separate corporate existence of the Purchaser will
cease and the Company will continue as the Surviving Corporation; provided,
however, that upon the mutual agreement of Parent and the Company, the Merger
may be structured so that the Company will be merged with and into the
Purchaser, with Purchaser continuing as the Surviving Corporation. The Merger
will be effected by the filing at the time of Closing of appropriate articles of
merger relating to the Merger with the Department of Financial Institutions of
the State of Wisconsin.
The Merger Agreement provides that, at the Effective Time, by virtue of the
Merger and without any action on the part of Parent, the Purchaser, the Company
or the holders thereof, the Shares will be converted into the right to receive
the Offer Price in cash, without interest thereon, as soon as is reasonably
practicable
20
<PAGE> 27
upon surrender of the certificate formerly representing such Shares (other than
any Shares held by Parent, the Purchaser, any wholly-owned subsidiary of Parent
or the Purchaser, in the treasury of the Company or by any wholly-owned
subsidiary of the Company, which Shares, by virtue of the Merger and without any
action on the part of the holder thereof, shall be cancelled and retired and
shall cease to exist with no payment being made with respect thereto, and other
than Dissenting Shares). At the Effective Time, each share of common stock, par
value $1.00 per share, of the Purchaser issued and outstanding immediately prior
to the Effective Time will, by virtue of the Merger and without any action on
the part of the holder thereof, be converted into and become one validly issued,
fully paid and nonassessable share of common stock of the Surviving Corporation.
Notwithstanding the foregoing, if Parent and the Company agree to restructure
the Merger (as described in the immediately preceding paragraph), then the
outstanding shares of the Purchaser's common stock will not be affected in any
manner by virtue of the Merger.
The Merger Agreement provides that the articles of incorporation of the
Purchaser, as in effect immediately prior to the Effective Time, will be the
articles of incorporation of the Surviving Corporation, until thereafter amended
in accordance with the provisions thereof and the WBCL. The by-laws of the
Purchaser in effect at the Effective Time will be the by-laws of the Surviving
Corporation, until thereafter amended in accordance with the provisions thereof
and the WBCL.
VOTE REQUIRED TO APPROVE THE MERGER
The Merger Agreement provides that if required by the Company's articles of
incorporation and/or applicable law in order to consummate the Merger, the
Company, acting through its Board of Directors, will, in accordance with
applicable law: (i) duly call, give notice of, convene and hold a special
meeting of the Company's shareholders as soon as practicable following the
Acceptance Date for the purpose of considering and taking action upon the Merger
Agreement; (ii) promptly prepare and file with the Commission a preliminary
information or proxy statement relating to the Merger and the Merger Agreement
and (x) obtain and furnish the information required to be included by the
Commission in the Proxy Statement (as hereinafter defined) and, after
consultation with Parent, respond promptly to any comments made by the
Commission with respect to the preliminary proxy statement and, subject to
compliance with Commission rules and regulations, cause a notice of a special
meeting and a definitive information or proxy statement (the "Proxy Statement")
to be mailed to the shareholders of the Company no later than the time required
by applicable law and the articles of incorporation and the by-laws of the
Company, and (y) to obtain the necessary approvals of the Merger and the Merger
Agreement by the shareholders of the Company; and (iii) subject to the
provisions of the Merger Agreement, include in the Proxy Statement the
recommendation of the Board of Directors of the Company that the shareholders of
the Company vote in favor of the approval of the Merger and the adoption of the
Merger Agreement. Since the Purchaser owns more than 90% of the outstanding
Shares, approval of the Merger can be obtained without the affirmative vote of
any other shareholder of the Company.
CONDITIONS TO THE MERGER
The respective obligations of Parent, the Purchaser and the Company to
consummate the Merger and the transactions contemplated thereby, if the Offer
shall have been consummated, are subject to the satisfaction or waiver in
writing, at or before the Effective Time, of certain conditions, including: (i)
to the extent required under the Company's articles of incorporation or
applicable law, the shareholders of the Company shall have duly approved the
transactions contemplated by the Merger Agreement; (ii) the consummation of the
Merger shall not be restrained, enjoined or prohibited by any order, judgment,
decree, injunction or ruling of a court of competent jurisdiction or any
Governmental Entity, and there shall not have been any statute, rule or
regulation enacted, promulgated or deemed applicable to the Merger by any
Governmental Entity which prevents the consummation of the Merger; and (iii) the
Purchaser shall have accepted for payment and paid for Shares tendered pursuant
to the Offer in accordance with the terms of the Merger Agreement (however, this
condition is not applicable to the obligations of Parent or the Purchaser if the
Purchaser fails to accept for payment or pay for Shares tendered pursuant to the
Offer in violation of the terms of the Offer).
21
<PAGE> 28
DIRECTORS
The Merger Agreement provides that promptly upon the payment by the
Purchaser for Shares pursuant to the Offer, and from time to time thereafter,
the Purchaser will be entitled to designate such number of directors, rounded up
to the next whole number, on the Board of Directors of the Company as is equal
to the product of the total number of directors on the Board of Directors of the
Company (determined after giving effect to the directors designated by the
Purchaser pursuant to this sentence) multiplied by the percentage that the
aggregate number of Shares beneficially owned by the Purchaser or its affiliates
bears to the total number of Shares then outstanding, and the Company will,
subject to compliance with Section 14(f) of the Exchange Act and Rule 14f-1
promulgated thereunder, upon request of the Purchaser, promptly take all actions
necessary to cause the Purchaser's designees to be so elected, including, if
necessary, promptly increasing the size of the Board of Directors of the Company
or seeking the resignations of one or more existing directors, or both;
provided, however, that prior to the Effective Time, the Board of Directors of
the Company will always have at least two members who are neither officers,
directors, shareholders or designees of the Purchaser or any of its affiliates
("Purchaser Insiders"). If the number of directors who are not Purchaser
Insiders is reduced below two for any reason prior to the Effective Time, then
the remaining directors who are not Purchaser Insiders (or if there is only one
director who is not a Purchaser Insider, the remaining director who is not a
Purchaser Insider) will be entitled to designate a person (or persons) to fill
such vacancy (or vacancies) who is not an officer, director, shareholder or
designee of the Purchaser or any of its affiliates and who will be a director
not deemed to be a Purchaser Insider for all purposes of the Merger Agreement.
At such time, the Company will, if requested by the Purchaser, also cause
persons designated by the Purchaser to constitute at least the same percentage
(rounded up to the next whole number) as is on the Board of Directors of the
Company of each committee of the Board of Directors of the Company; provided,
however, that prior to the Effective Time each committee of the Board of
Directors of the Company shall have at least one member who is not a Purchaser
Insider. The Company's obligation to appoint the Purchaser's designees to the
Board of Directors of the Company is subject to Section 14(f) of the Exchange
Act and Rule 14f-1 thereunder. The Company will promptly take all actions
required pursuant to such Section and Rule in order to fulfill its obligations.
From and after the election or appointment of the Purchaser's designees and
prior to the Effective Time, any amendment or termination of the Merger
Agreement by the Company, any extension by the Company of the time for the
performance of any of the obligations or other acts of Parent or the Purchaser
or waiver of any of the Company's rights under the Merger Agreement, or any
other action taken by the Board of Directors of the Company in connection with
the Merger Agreement, will require the concurrence of a majority of the
directors of the Company then in office who are not Purchaser Insiders.
CONDUCT OF BUSINESS OF THE COMPANY
Except as required by the Merger Agreement or with the prior written
consent of Parent, during the period from the date of the Merger Agreement to
the Effective Time, the Company will and will cause each of its subsidiaries to
conduct its operations only in the ordinary course of business consistent with
past practice and will use its commercially reasonable efforts and will cause
each of its subsidiaries to use its commercially reasonable efforts, to preserve
intact the business organization of the Company and each of its subsidiaries, to
use, operate, maintain and repair all of its assets and properties in a normal
business manner consistent with past practice, to keep available the services of
its and their present officers and key employees and to preserve the goodwill of
those having business relationships with the Company and to conduct business
with suppliers, customers, creditors and others having business relationships
with the Company in the best interests of the Company. Without limiting the
generality of the foregoing, and except as otherwise required or contemplated by
the Merger Agreement or the Stock Option Agreement, the Company will not, and
will not permit any of its subsidiaries to, prior to the Effective Time, without
the prior written consent of Parent: (a) adopt any amendment to its charter or
by-laws or comparable organizational documents; (b) issue, reissue or sell or
authorize the issuance, reissuance or sale of additional shares of capital stock
of any class, or shares convertible into capital stock of any class, or any
rights, warrants or options to acquire any convertible shares or capital stock,
other than the issuance of Shares pursuant to Options outstanding on the date of
the Merger Agreement or pursuant to the Stock Option Agreement; (c) declare, set
aside or pay any dividend or other distribution (whether in cash, shares or
property or any combination thereof) in respect of any class or series
22
<PAGE> 29
of its capital stock other than between any of the Company and any subsidiary
which is wholly-owned by the Company; (d) split, combine, subdivide, reclassify
or directly or indirectly redeem, purchase or otherwise acquire, recapitalize or
reclassify, or propose to redeem or purchase or otherwise acquire, any shares of
its capital stock or any of its other shares or liquidate in whole or in part;
(e) except for (i) increases in salary, wages and benefits of non-executive
officers or employees of the Company or its subsidiaries in the ordinary course
of business consistent with past practice, (ii) increases in salary, wages and
benefits granted to officers and employees of the Company or its subsidiaries in
conjunction with new hires in the ordinary course of business consistent with
past practice or (iii) increases in salary, wages and benefits to employees of
the Company or its subsidiaries pursuant to collective bargaining agreements
entered into in the ordinary course of business consistent with past practice,
(A) increase the compensation or fringe benefits payable or to become payable to
its directors, officers or key employees (whether from the Company or any of its
subsidiaries), (B) pay any benefit not required by any existing plan or
arrangement (including, without limitation, the granting of stock options, stock
appreciation rights, shares of restricted stock or performance units), (C) grant
any severance or termination pay to (except pursuant to existing agreements,
plans or policies and as required by such agreements, plans or policies) any
director, officer or other key employee of the Company or any of its
subsidiaries, (D) enter into or modify any employment or severance agreement
with any director, officer or other key employee of the Company or any of its
subsidiaries or (E) establish, adopt, enter into, or amend any collective
bargaining, bonus, profit sharing, thrift, compensation, stock option,
restricted stock or company benefit plans for the benefit or welfare of any
directors, officers or current or former employees, except in each case to the
extent required by applicable law or regulation; (f) (i) sell, lease, transfer
or assign any of its assets, tangible or intangible, other than for a fair
consideration in the ordinary course of business and other than the disposition
of obsolete or unusable property, (ii) enter into any contract (other than
purchase and sales orders in the ordinary course of business in accordance with
past practice) involving more than $25,000 without the consent of Parent (which
consent shall not be unreasonably withheld), (iii) accelerate, terminate, modify
in any material respect, or cancel any contract (other than purchase and sales
orders and other than in the ordinary course of business in accordance with past
practice) involving more than $25,000 to which the Company is a party or by
which it is bound without the consent of Parent (which consent shall not be
unreasonably withheld), (iv) make any capital expenditure (or series of related
capital expenditures) involving either more than $25,000 (unless such
expenditure is identified in the current business plan of the Company as
disclosed to Parent) or outside the ordinary course of business, (v) delay or
postpone the payment of accounts payable and other liabilities outside the
ordinary course of business, (vi) cancel, compromise, waive or release any right
or claim (or series of related rights and claims) not covered by the reserves or
accruals relating to such claim in the Company's December 31, 1997 consolidated
balance sheet either involving more than $25,000 or outside the ordinary course
of business without the consent of Parent (which consent shall not be
unreasonably withheld), (vii) grant any license or sublicense of any rights
under or with respect to any intellectual property other than in the ordinary
course of business or (viii) enter into any contract or agreement with any
affiliate of the Company, except for transactions in the ordinary course of
business upon commercially reasonable terms; (g) (i) incur, assume or prepay any
long-term debt or incur or assume any short-term debt, except that the Company
and its subsidiaries may incur, assume or prepay debt in the ordinary course of
business consistent with past practice under existing lines of credit, (ii) pay,
discharge, settle or satisfy any other claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise), other than
in the ordinary course of business consistent with past practice, (iii) assume,
guarantee, endorse or otherwise become liable or responsible (whether directly,
contingently or otherwise) for the obligations of any other person or (iv) make
any loans, advances or capital contributions to, or investments in, any other
person except in the ordinary course of business consistent with past practice
and except for loans, advances, capital contributions or investments between any
subsidiary wholly-owned by the Company and the Company or another subsidiary
wholly-owned by the Company; or (h) agree in writing or otherwise to take any of
the foregoing actions.
NO SOLICITATION
Pursuant to the Merger Agreement, the Company covenanted and agreed with
Parent and the Purchaser that neither the Company nor any of its subsidiaries
has any agreement, arrangement or understanding with
23
<PAGE> 30
any potential acquiror that, directly or indirectly, would be violated, or
require any payments, by reason of the execution, delivery and/or consummation
of the Merger Agreement and the Stock Option Agreement. The Company will, will
cause its subsidiaries to, and will use its commercially reasonable efforts to
cause the officers, directors, employees, investment bankers, attorneys and
other agents and representatives of the Company and its subsidiaries to,
immediately cease any existing activities, information exchanges, discussions or
negotiations with any person (including a "person" as defined in Section
13(d)(3) of the Exchange Act) other than Parent or the Purchaser (a "Third
Party") heretofore conducted with respect to any Acquisition Transaction (as
defined below). The Company shall not, shall cause its subsidiaries not to, and
shall use its commercially reasonable efforts to cause the officers, directors,
employees, investment bankers, attorneys and other agents and representatives of
the Company and its subsidiaries not to, directly or indirectly, (x) solicit,
initiate, continue, facilitate or encourage (including by way of furnishing or
disclosing non-public information) any inquiries, proposals or offers from any
Third Party with respect to, or that could reasonably be expected to lead to,
any acquisition or purchase of all or any significant portion of the assets or
business of, or any significant equity interest in (including by way of a tender
offer), or any merger, consolidation or business combination with, or any
similar transaction involving, the Company or any of its subsidiaries (the
foregoing being referred to collectively as an "Acquisition Transaction"), or
(y) negotiate or otherwise communicate in any way with any Third Party with
respect to any Acquisition Transaction or enter into, approve or recommend any
agreement, arrangement or understanding requiring the Company to abandon,
terminate or fail to consummate the Offer and/or the Merger or any other
transaction contemplated thereby or by the Stock Option Agreement.
Notwithstanding anything to the contrary in the foregoing, the Company may in
response to an unsolicited written proposal with respect to an Acquisition
Transaction involving the acquisition of all of the Shares (or all or
substantially all of the assets of the Company and its subsidiaries) from a
Third Party, furnish or disclose non-public information to such Third Party and
negotiate or otherwise communicate with such Third Party, in each case only if
(A) the Board of Directors of the Company (after consultation with its outside
legal counsel and independent financial advisors) determines in good faith that
such proposal would reasonably be likely to be more favorable to the Company and
its shareholders than the transactions contemplated by the Merger Agreement (the
proposal with respect to an Acquisition Transaction meeting the requirements of
clause (A), a "Superior Proposal"), (B) prior to furnishing or disclosing any
non-public information to, or entering into discussions or negotiations with,
such Third Party, the Company receives from such Third Party a customary
confidentiality agreement similar in all material respects to the
confidentiality agreement between Parent and the Company, and (C) the Company
advises Parent of all such non-public information delivered to such Third Party
prior to such delivery; provided, however, that the Company shall not enter into
a definitive agreement with respect to a Superior Proposal unless the Company
first complies with the immediately following paragraph, including the last
sentence thereof, and then unless the Company concurrently terminates the Merger
Agreement in accordance with the terms thereof.
The Merger Agreement provides that the Company will promptly (but in any
event within one business day of the Company becoming aware of same) advise
Parent of the receipt by the Company, any of its subsidiaries or any of the
Company's investment bankers, attorneys or other agents or representatives of
any inquires or proposals relating to an Acquisition Transaction and any actions
taken pursuant to the immediately preceding paragraph. The Company shall
promptly (but in any event within one business day of the Company becoming aware
of same) provide Parent with a copy of any such inquiry or proposal in writing
and a written statement with respect to any such inquiries or proposals not in
writing, which statement shall include the identity of the parties making such
inquiries or proposal and the material terms thereof and will update Parent on
an ongoing basis, or upon Parent's reasonable request, of the status thereof;
provided, however, that the Company shall not be obligated to provide a copy of,
or a written statement with respect to, any such inquiry if the Board of
Directors of the Company determines in good faith, after consultation with
outside legal counsel, that not providing such copy or written statement is
necessary to allow the Board of Directors of the Company to fulfill its
fiduciary duties to the shareholders of the Company under applicable law. For
the avoidance of doubt, the Company has agreed that it will not terminate the
Merger Agreement and enter into any agreement with respect to an Acquisition
Transaction unless and until Parent has been given the opportunity at least two
business days prior to the entering into of such agreement to match the terms of
such agreement.
24
<PAGE> 31
TERMINATION
The Merger Agreement may be terminated and the Merger contemplated thereby
may be abandoned at any time prior to the Effective Time, whether or not
approval thereof by the shareholders of the Company has been obtained:
(a) by the mutual written consent of Parent, the Purchaser and the
Company prior to the date on which Parent's designees constitute a majority
of the Board of Directors of the Company; or
(b) by the Company if the Company is not in material breach of any of
its representations, warranties, covenants or arrangements contained in the
Merger Agreement and the Stock Option Agreement and if (i) the Purchaser
fails to commence the Offer as provided in the Merger Agreement, (ii) the
Purchaser shall not have accepted for payment and paid for Shares pursuant
to the Offer in accordance with the terms thereof on or before August 31,
1998 or (iii) the Purchaser fails to purchase validly tendered Shares in
violation of the terms of the Offer or the Merger Agreement; or
(c) by Parent or the Company if the Offer expires or is terminated or
withdrawn pursuant to its terms without any Shares being purchased
thereunder; provided, however, that Parent may terminate the Merger
Agreement upon the termination or withdrawal of the Offer if Parent's or
the Purchaser's termination or withdrawal of the Offer is not in violation
of the terms of the Merger Agreement or the Offer; or
(d) by Parent or the Company if any court or other governmental entity
shall have issued, enacted, entered, promulgated or enforced any order,
judgment, decree, injunction, or ruling or taken any other action
restraining, enjoining or otherwise prohibiting the Merger and such order,
judgment, decree, injunction, ruling or other action is final and
nonappealable; or
(e) by the Company if, prior to the purchase of Shares pursuant to the
Offer in accordance with the terms of the Merger Agreement, (i) there
occurs, on the part of Parent or the Purchaser, a material breach of any
representation, warranty, covenant or agreement contained in the Merger
Agreement which is not curable or, if curable, is not cured within 30 days
after written notice of such breach is given by the Company to the party
committing the breach, except in any case, such failures which are not
reasonably likely to affect adversely Parent's or the Purchaser's ability
to complete the Offer or the Merger or (ii) the Company enters into a
definitive agreement with respect to a Superior Proposal as permitted under
the Merger Agreement and after complying with the provisions of the Merger
Agreement and making the payments described under "Fees and Expenses"
below; or
(f) by Parent if, prior to the purchase of Shares pursuant to the
Offer in accordance with the terms of the Merger Agreement, (i) there shall
have occurred, on the part of the Company, a breach of any representation,
warranty, covenant or agreement contained in the Merger Agreement which
individually, or in the aggregate, if not cured would be reasonably likely
to have a Material Adverse Effect on the Company and which is not curable
or, if curable, is not cured within the later of (x) 30 days after written
notice of such breach is given by Parent to the Company and (y) the
satisfaction of all conditions to the Offer not related to such breach or
(ii) the Board of Directors of the Company or committee thereof shall have
withdrawn or modified (or shall have resolved to withdraw or modify), in a
manner adverse to Parent, its approval or recommendation of the Merger
Agreement or any of the transactions contemplated thereby and the Board of
Directors of the Company and such committee shall not have fully reinstated
such approval or recommendations within three business days after a request
by Parent to so reinstate or shall have recommended (or resolved to
recommend) an Acquisition Transaction (other than the Offer and Merger) to
the shareholders of the Company; or
(g) by Parent if it is not in material breach of its obligation
hereunder or under the Offer and no Shares have been purchased pursuant to
the Offer on or before August 31, 1998.
25
<PAGE> 32
FEES AND EXPENSES
The Merger Agreement provides that, except as described below, whether or
not the Merger is consummated, all costs and expenses incurred in connection
with the Offer, the Merger Agreement, the Stock Option Agreement and the
transactions contemplated by the Merger Agreement and the Stock Option Agreement
will be paid by the party incurring such expenses.
Pursuant to the terms of the Merger Agreement, (i) in the event the Merger
Agreement is terminated pursuant to subsection (e)(ii) under "Termination" above
or (ii) in the event that (x) any person shall have publicly disclosed a
proposal regarding an Acquisition Transaction and (y) following such disclosure,
either (a) August 31, 1998 occurs without the shareholder approval of the Merger
being obtained (other than as a result of a material breach of the Merger
Agreement by Parent or the Purchaser that has not been cured within the time
period set forth in the Merger Agreement) or (b) the Company breaches (prior to
the time that the designees of the Purchaser constitute a majority of the Board
of Directors of the Company) any of its material obligations under the Merger
Agreement and does not cure such breach within the time period set forth in the
Merger Agreement or (c) the Merger Agreement is terminated pursuant to
subsection (f)(ii) under "Termination" above and (z) not later than twelve
months after any such termination the Company shall have entered into a
definitive agreement for an Acquisition Transaction, or an Acquisition
Transaction shall have been consummated, then the Company shall pay to an
account designated by Parent a termination fee, in immediately available funds,
of $1,000,000 (the "Termination Fee") and shall reimburse Parent for all
out-of-pocket fees and expenses (but in no event greater than $350,000)
reasonably incurred by Parent and the Purchaser in connection with the Merger
Agreement, the Offer and the Merger. The Termination Fee and any reimbursement
of expenses shall be paid prior to, and shall be a condition to the
effectiveness of, any termination of the Merger Agreement referred to in clause
(i) above or on the next business day after the earlier of such Acquisition
Transaction being consummated or a definitive agreement for such Acquisition
Transaction being entered into if such fee and expenses are payable as a result
of clause (ii) above.
EMPLOYEE BENEFIT ARRANGEMENTS
The Merger Agreement provides that:
(a) Following the Effective Time and through December 31, 1999, the
Purchaser will provide employee benefit plans and programs for the benefit
of employees of the Company and its subsidiaries (excluding plans or
programs which provide for issuance of Shares or options on Shares) that
are of reasonably equivalent value to such employees as compared with the
Company Benefit Plans (as defined in the Merger Agreement), subject to
applicable governmental rules and regulations. All service credited to each
employee by the Company or any of its subsidiaries through the Effective
Time shall be recognized by the Purchaser for purposes of eligibility and
vesting (but not benefit accrual) under any employee benefit plan provided
by the Purchaser for the benefit of the employees.
(b) Parent will cause the Surviving Corporation to honor (without
modification) and assume all written employment agreements with individual
employees, severance agreements with individual employees and other
comparable agreements with individual employees of the Company or any of
its subsidiaries, all as in effect on the date of the Merger Agreement.
(c) The Purchaser will maintain in effect the Company severance
plan/program (as specified in the employee handbook) for a period of two
years immediately following the Effective Time and the Company severance
plan/program will not be terminated or adversely amended during such
two-year period.
(d) The Company will cause the interest of each of the employees of
the Company and its subsidiaries as of the Acceptance Date in the
Hein-Werner Retirement and Savings Plan and Trust to be fully vested and
nonforfeitable as of the Acceptance Date.
26
<PAGE> 33
(e) For a period of 18 months following the Effective Time, Parent
shall cause the Surviving Corporation to continue to provide medical
insurance, at COBRA premium rates, to O. Friend, a former director of the
Company.
SOURCE AND AMOUNT OF FUNDS
Parent has estimated that the total amount of funds required by Purchaser
to purchase all of the outstanding Shares pursuant to the Offer and the Merger,
repay certain of the Company's indebtedness and to pay related fees and
expenses, will be approximately $44,000,000. Of such amount, approximately
$34.49 million was used to purchase Shares tendered pursuant to the Offer. The
Purchaser has and will obtain such funds from Parent by means of capital
contributions, loans or a combination thereof. Parent has and will obtain the
funds for such capital contributions or loans from available borrowings under
Parent's existing unsecured lines of credit with Firstar Bank Milwaukee, N.A.
(the "Firstar Line of Credit") and The First National Bank of Chicago (the "FNBC
Line of Credit"), which provide for maximum borrowings in an aggregate principal
amount of up to $31 million and $50 million, respectively.
Advances under the Firstar Line of Credit bear interest, at Parent's
election, at a rate equal to either (i) the bank's announced prime rate in
effect from time to time, payable monthly until demand or (ii) a fixed rate and
for such term as may be quoted by the bank and agreed to by Parent. The Firstar
Line of Credit may be terminated by either party at any time. Advances under the
FNBC Line of Credit bear interest, at Parent's election, at a rate equal to
either (i) the bank's corporate base rate announced from time to time, payable
monthly and on demand or (ii) subject to availability and for a maturity to be
agreed upon, such other fixed rate as the parties may mutually agree upon. The
FNBC Line of Credit may be terminated by either party at any time. No plans or
arrangements have been made to refinance or repay borrowings under the Firstar
Line of Credit or the FNBC Line of Credit. It is anticipated that any borrowings
incurred by Parent in connection with the Offer will be repaid from internally
generated funds of Parent, the Purchaser and the Company and/or refinanced in
the private or public markets.
PRICE RANGE OF SHARES; DIVIDENDS
The Shares are currently listed on the AMEX under the symbol "HNW." The
following table sets forth, for each of the periods indicated, the high and low
sales price per Share on the AMEX.
<TABLE>
<CAPTION>
HIGH LOW
------- ------
<S> <C> <C>
1996:
First Quarter............................................. $ 6.375 $4.250
Second Quarter............................................ 8.750 5.813
Third Quarter............................................. 8.000 5.750
Fourth Quarter............................................ 7.250 6.250
1997:
First Quarter............................................. $ 7.500 $6.375
Second Quarter............................................ 8.250 6.375
Third Quarter............................................. 8.375 7.250
Fourth Quarter............................................ 8.375 6.875
1998:
First Quarter............................................. $ 8.063 6.438
Second Quarter (through June 16, 1998).................... 12.563 6.375
</TABLE>
On April 27, 1998, the last full trading day prior to the public
announcement of the execution of the Merger Agreement by the Company, Parent and
Purchaser, the closing sales price of the Shares on the AMEX was $8.250 per
Share. On May 1, 1998, the last full trading day prior to the commencement of
the Offer, the closing sales price of the Shares on the AMEX was $12.438 per
Share and on June 16, 1998, the
27
<PAGE> 34
last full trading day prior to the printing of this Information Statement, the
closing sales price of the Shares on the AMEX was $12.438 per Share.
The Company paid a 5% stock dividend on (i) January 24, 1997 to
shareholders of record on January 3, 1997 and (ii) January 23, 1998 to
shareholders of record on January 2, 1998. The Company's current credit
agreement contains a restriction against the payment of cash dividends. The
Merger Agreement provides that, without the prior written consent of Parent, the
Company will not declare, set aside or pay any dividend on or make any other
distribution in respect of its capital stock.
SHAREHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR THE SHARES
-
PRINCIPAL SHAREHOLDERS AND SHARE OWNERSHIP OF MANAGEMENT
As of the Record Date, Parent and the Purchaser and their respective
affiliates, beneficially own 2,737,030 Shares, or 93.7% of the Shares. B.M.
Beronja, D.S. Huml, M.F. Montemurro and S.F. Marrinan, as directors of the
Company may be deemed to beneficially own such Shares. Each such director
disclaims beneficial ownership of such Shares.
According to information available to the Company as of the Record Date,
all current executive officers and directors of the Company tendered their
Shares pursuant to the Offer.
AVAILABLE INFORMATION
Both Parent and the Company are subject to the informational requirements
of the Exchange Act, and in accordance therewith file reports, proxy statements
and other information with the Commission. The Tender Offer Statement on
Schedule 14D-1, as amended (the "Schedule 14D-1") filed by Parent and the
Purchaser, in connection with Schedule 14D-9 filed by the Company in connection
with the Offer, as well as such reports, proxy statements and other information
filed by the Company and Parent's Annual Report on Form 10-K for the fiscal year
ended January 3, 1998 filed by Parent, may be inspected and copied at the public
reference facilities of the Commission at Room 1024, 450 Fifth Street, N.W.,
Judiciary Plaza, Washington, D.C. 20549 and at the regional offices of the
Commission located at Seven World Trade Center, 13th Floor, Suite 1300, New
York, New York 10048 and Suite 1400, Citicorp Center, 14th Floor, 500 West
Madison Street, Chicago, Illinois 60661. Copies of such material can also be
obtained at prescribed rates by writing to the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549.
In addition, such reports, proxy statements and other information concerning
Parent can be inspected at the offices of the New York Stock Exchange, Inc., 20
Broad Street, New York, New York 10005 and such reports, proxy statements and
other information concerning the Company can be inspected at the library of the
AMEX, 86 Trinity Place, New York, New York 10006. The Commission maintains a Web
site (located at http://www.sec.gov) which includes reports, proxy statements
and other information filed electronically by registrants with the Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company incorporates by reference herein the following documents filed
with the Commission pursuant to the Exchange Act:
1. The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1997;
2. Amendment No. 1 to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1997;
3. The Company's Quarterly Report on Form 10-Q for the quarter ended
March 28, 1998.
All documents and reports filed by the Company pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act after the date of this Information
Statement and prior to the date of the Special Meeting shall
28
<PAGE> 35
be deemed to be incorporated by reference in this Information Statement and to
be a part hereof from the dates of filing of such documents or reports. Any
statement contained in a document incorporated or deemed to be incorporated by
reference herein shall be deemed to be modified or superseded for purposes of
this Information Statement to the extent that a statement contained herein or in
any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Information Statement.
THIS INFORMATION STATEMENT INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE
NOT PRESENTED HEREIN OR DELIVERED HEREWITH. SUCH DOCUMENTS (OTHER THAN EXHIBITS
TO SUCH DOCUMENTS UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED BY
REFERENCE) ARE AVAILABLE, WITHOUT CHARGE, TO ANY PERSON, INCLUDING ANY
BENEFICIAL OWNER, TO WHOM THIS INFORMATION STATEMENT IS DELIVERED, ON WRITTEN OR
ORAL REQUEST TO HEIN-WERNER CORPORATION, 2120 PEWAUKEE ROAD, WAUKESHA, WISCONSIN
53188 (TELEPHONE NUMBER (414) 542-6611), ATTENTION: J. L. DINDORF.
29
<PAGE> 36
ANNEX I
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of April 27, 1998 (this
"Agreement"), by and among Snap-on Incorporated, a Delaware company ("Parent"),
Snap-on Pace Company, a Wisconsin corporation and a wholly-owned subsidiary of
Parent (the "Purchaser"), and Hein-Werner Corporation, a Wisconsin corporation
(the "Company").
WHEREAS, the respective Boards of Directors of Parent, the Purchaser and
the Company have approved the acquisition of the Company by the Purchaser on the
terms and subject to the conditions set forth in this Agreement; and
WHEREAS, in furtherance of such acquisition, Parent proposes to cause the
Purchaser to make a tender offer (as it may be amended as permitted under this
Agreement, the "Offer") to purchase all of the issued and outstanding shares of
common stock, $1.00 par value per share, of the Company (the "Common Shares" or
"Shares") (including the associated Common Share Purchase Rights (the "Rights")
issued pursuant to the Rights Agreement, dated as of May 9, 1989, between the
Company and Firstar Trust Company (f/k/a First Wisconsin Trust Company), as
Rights Agent (the "Rights Agreement")), at a price per Common Share of $12.60
net to the seller in cash (such price, or any higher price per Share paid in the
Offer, the "Offer Price"); and
WHEREAS, the Board of Directors of the Company has approved this Agreement,
the Offer and the Merger (as hereinafter defined), has determined that the Offer
and the Merger are fair and in the best interests of the Company's shareholders,
and is recommending that the shareholders of the Company accept the Offer and
tender all their Shares; and
WHEREAS, the respective Boards of Directors of Parent, the Purchaser and
the Company have approved the merger of the Purchaser with and into the Company,
as set forth below (the "Merger"), in accordance with the Wisconsin Business
Corporation Law (the "WBCL") and upon the terms and subject to the conditions
set forth in this Agreement, whereby each issued and outstanding Share not owned
directly or indirectly by Parent, the Purchaser or the Company will be converted
into the right to receive the Offer Price in cash; and
WHEREAS, as a further inducement to the parties to enter into this
Agreement, Parent, the Purchaser and the Company have entered into a Stock
Option Agreement, dated the date hereof (the "Stock Option Agreement"), pursuant
to which the Company has granted to the Purchaser an option to purchase newly
issued Common Shares under certain circumstances; and
WHEREAS, Parent, the Purchaser and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Offer and the Merger and also to prescribe various conditions to the Offer and
the Merger.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, Parent,
the Purchaser and the Company agree as follows:
ARTICLE I
THE OFFER
SECTION 1.01 The Offer.
(a) So long as none of the events set forth in clauses (a) through (h) of
Annex I hereto shall have occurred or exist, the Purchaser shall, and Parent
shall cause the Purchaser to, commence (within the meaning of Rule 14d-2(a) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act")) as
promptly as practicable after the date hereof, but in any event not later than
May 4, 1998, the Offer for any and all outstanding Shares not owned by the
Purchaser at the Offer Price applicable to such Shares, net to the seller in
cash. The initial expiration date for the Offer shall be the twentieth business
day from and after the date the Offer is commenced, including the date of
commencement as the first business day in accordance
<PAGE> 37
with Rule 14d-2 under the Exchange Act (the "Expiration Date"). As promptly as
practicable, the Purchaser shall file with the Securities and Exchange
Commission (the "SEC") the Purchaser's Tender Offer Statement on Schedule 14D-1
(the "Schedule 14D-1" and together with the documents therein pursuant to which
the Offer will be made, and with any supplements or amendments thereto, the
"Offer Documents"), which shall contain (as an exhibit thereto) the Purchaser's
Offer to Purchase (the "Offer to Purchase") which shall be mailed to the holders
of Shares with respect to the Offer. The obligation of Parent and the Purchaser
to accept for payment or pay for any Shares tendered pursuant to the Offer will
be subject only to there being validly tendered and not withdrawn prior to the
expiration of the Offer, that number of Shares which represents at least 66 2/3%
of the Shares outstanding on a fully diluted basis (without giving pro forma
effect to the potential issuance of any Shares issuable under the Stock Option
Agreement) (the "Minimum Condition") and to the satisfaction or waiver of the
other conditions set forth in Annex I hereto ("fully diluted basis" means issued
and outstanding Shares and Shares subject to issuance under outstanding employee
stock options). Without the prior written consent of the Company, the Purchaser
shall not (i) decrease the Offer Price or change the form of consideration
payable in the Offer, (ii) decrease the number of Shares sought to be purchased
in the Offer, or (iii) amend any other term of the Offer in any manner adverse
to the holders of any Shares; provided, however, that if on the initial
scheduled Expiration Date, the sole condition remaining unsatisfied is the
failure of the waiting period under the HSR Act (as hereinafter defined) to have
expired or been terminated, the Purchaser shall, and Parent shall cause the
Purchaser to, extend the expiration date from time to time until two business
days after the expiration of the waiting period under the HSR Act.
(b) Subject to the terms of the Offer and this Agreement and the
satisfaction or waiver of all the conditions of the Offer set forth in Annex I
hereto as of the Expiration Date, the Purchaser will accept for payment and pay
for all Shares validly tendered and not withdrawn pursuant to the Offer as soon
as practicable after the Expiration Date.
(c) The Offer Documents will comply in all material respects with the
provisions of applicable federal securities laws and, on the date filed with the
SEC and on the date first published, sent or given to the Company's
shareholders, shall not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements made therein, in light of the circumstances under which
they were made, not misleading, except that no representation is made by Parent
or the Purchaser with respect to information supplied by the Company in writing
for inclusion in the Offer Documents. No representation, warranty or covenant is
made or shall be made herein by the Company with respect to information
contained in the Offer Documents other than information supplied by the Company
in writing expressly for inclusion in the Offer Documents. Each of Parent and
the Purchaser, on the one hand, and the Company, on the other hand, agrees
promptly to correct any information provided by it for use in the Offer
Documents if and to the extent that it shall have become false or misleading in
any material respect and the Purchaser further agrees to take all steps
necessary to cause the Offer Documents as so corrected to be filed with the SEC
and to be disseminated to the Company's shareholders, in each case as and to the
extent required by applicable federal securities laws. Each of Parent and the
Purchaser agrees to give the Company a reasonable opportunity to review and
comment upon any Offer Document to be filed with the SEC prior to any such
filing and to provide in writing any comments each may receive from the SEC or
its staff with respect to the Offer Documents promptly after the receipt of such
comments.
SECTION 1.02 Company Actions.
(a) Currently with the commencement of the Offer, the Company shall file
with the SEC and mail to the holders of Shares a Solicitation/Recommendation
Statement on Schedule 14D-9 with respect to the Offer (together with any
amendments or supplements thereto, the "Schedule 14D-9"). The Schedule 14D-9
will set forth, and the Company hereby represents, that the Board of Directors
of the Company, at a meeting duly called and held, has unanimously (i)
determined that the Offer and the Merger are fair to and in the best interests
of the Company and its shareholders, (ii) approved this Agreement, the Stock
Option Agreement and the transactions contemplated hereby and thereby, including
the Offer and the Merger, in accordance with the applicable provisions of the
WBCL, and (iii) resolved to recommend that the Company's shareholders accept the
Offer, tender their Shares thereunder to the Purchaser and approve and adopt
this Agreement and the Merger; provided, however, that such recommendation may
be withdrawn, modified or amended to the
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extent that the Board of Directors of the Company determines in good faith,
after consultation with outside counsel, that taking such action is necessary in
the exercise of its fiduciary obligations under applicable Law (as hereinafter
defined).
(b) The Schedule 14D-9 will comply in all material respects with the
provisions of applicable federal securities laws and, on the date filed with the
SEC and on the date first published, sent or given to the Company's
shareholders, shall not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements made therein, in light of the circumstances under which
they were made, not misleading, except that no representation is made by the
Company with respect to information supplied by Parent or the Purchaser in
writing for inclusion in the Schedule 14D-9. No representation, warranty or
covenant is made or shall be made herein by Parent or the Purchaser with respect
to information contained in the Schedule 14D-9 other than information supplied
by Parent and/or the Purchaser in writing expressly for inclusion in the
Schedule 14D-9. Each of the Company, on the one hand, and Parent and the
Purchaser, on the other hand, agree promptly to correct any information provided
by either of them for use in the Schedule 14D-9 if and to the extent that it
shall have become false or misleading, and the Company further agrees to take
all steps necessary to cause the Schedule 14D-9 as so corrected to be filed with
the SEC and to be disseminated to the Shareholders, in each case as and to the
extent required by applicable federal securities laws. The Company agrees to
give each of Parent and the Purchaser a reasonable opportunity to review and
comment upon the Schedule 14D-9 to be filed with the SEC prior to such filing
and to provide in writing any comments the Company may receive from the SEC or
its staff with respect to the Schedule 14D-9 promptly upon receipt of such
comments.
(c) In connection with the Offer, the Company will promptly furnish the
Purchaser with such information and assistance as the Purchaser or its agents or
representatives may reasonably request in connection with communicating the
Offer to the record and beneficial holders of the Shares, including, without
limitation, mailing labels, its shareholders list, security position listings
and non-objecting beneficial owners list, if any, or a computer file containing
the names and addresses of all recordholders of Common Shares as of a recent
date, and shall furnish the Purchaser with such additional information
(including, but not limited to, updated lists of holders of Common Shares and
their addresses, mailing labels and lists of security positions). Subject to the
requirements of applicable Law, and except for such actions as are necessary to
disseminate the Offer Documents and any other documents necessary to consummate
the Offer and the Merger, Parent and the Purchaser and each of their affiliates,
associates, partners, employees, agents and advisors shall hold in confidence
the information contained in such labels, shareholders list, security position
listings, non-objecting beneficial owners list and the information referred to
in the preceding sentence, shall use such information only in connection with
the Offer and the Merger, and, if this Agreement is terminated in accordance
with its terms, shall deliver promptly to the Company all copies of such
information (and any copies, compilations or extracts thereof or based thereon)
then in their possession or under their control.
SECTION 1.03 Directors.
(a) Promptly upon the payment by the Purchaser for Shares pursuant to the
Offer, and from time to time thereafter, the Purchaser shall be entitled to
designate such number of directors, rounded up to the next whole number, on the
Board of Directors of the Company as is equal to the product of the total number
of directors on the Board of Directors of the Company (determined after giving
effect to the directors designated by the Purchaser pursuant to this sentence)
multiplied by the percentage that the aggregate number of Shares beneficially
owned by the Purchaser or its affiliates bears to the total number of Shares
then outstanding, and the Company shall, subject to compliance with Section
14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder, upon request of
the Purchaser, promptly take all actions necessary to cause the Purchaser's
designees to be so elected, including, if necessary, promptly increasing the
size of the Board of Directors of the Company or seeking the resignations of one
or more existing directors, or both; provided, however, that prior to the
Effective Time (as defined in Section 2.02) the Board of Directors of the
Company shall always have at least two members who are neither officers,
directors, shareholders or designees of the Purchaser or any of its affiliates
("Purchaser Insiders"). If the number of directors who are not Purchaser
Insiders is reduced below two for any reason prior to the Effective Time, then
the remaining directors who are not Purchaser Insiders (or if there is only one
director who is not a Purchaser Insider, the remaining director
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who is not a Purchaser Insider) shall be entitled to designate a person (or
persons) to fill such vacancy (or vacancies) who is not an officer, director,
shareholder or designee of the Purchaser or any of its affiliates and who shall
be a director not deemed to be a Purchaser Insider for all purposes of this
Agreement. At such time, the Company shall, if requested by the Purchaser, also
cause persons designated by the Purchaser to constitute at least the same
percentage (rounded up to the next whole number) as is on the Board of Directors
of the Company of each committee of the Board of Directors of the Company;
provided, however, that prior to the Effective Time each committee of the Board
of Directors of the Company shall have at least one member who is not a
Purchaser Insider.
(b) The Company's obligation to appoint the Purchaser's designees to the
Board of Directors of the Company shall be subject to Section 14(f) of the
Exchange Act and Rule 14f-1 thereunder. The Company shall promptly take all
actions required pursuant to such Section and Rule in order to fulfill its
obligations under this Section 1.03, including mailing to the shareholders of
the Company the information required by Section 14(f) and Rule 14f-1 as is
necessary to enable the Purchaser's designees to be elected to the Board of
Directors of the Company, and shall include in the Schedule 14D-9 such
information with respect to the Company and its officers and directors as is
required under such Section and Rule in order to fulfill its obligations under
this Section 1.03. Parent will supply in writing any information with respect to
itself and its officers, directors and affiliates required by such Section and
Rule to the Company.
(c) From and after the election or appointment of the Purchaser's designees
pursuant to this Section 1.03 and prior to the Effective Time, any amendment or
termination of this Agreement by the Company, any extension by the Company of
the time for the performance of any of the obligations or other acts of Parent
or the Purchaser or waiver of any of the Company's rights hereunder, or any
other action taken by the Board of Directors of the Company in connection with
this Agreement, will require the concurrence of a majority of the directors of
the Company then in office who are not Purchaser Insiders.
ARTICLE II
THE MERGER
SECTION 2.01 The Merger. Upon the terms and subject to the satisfaction or
waiver of the conditions hereof, and in accordance with the applicable
provisions of this Agreement and the WBCL, at the Effective Time (as defined in
Section 2.02) the Purchaser shall be merged with and into the Company. Following
the Merger, the separate corporate existence of the Purchaser shall cease and
the Company shall continue as the surviving corporation (the "Surviving
Corporation"). Upon the mutual agreement of Parent and the Company, the Merger
may be structured so that the Company shall be merged with and into the
Purchaser, with the Purchaser continuing as the Surviving Corporation; provided,
however, that the Company shall be deemed not to have breached any of its
representations, warranties or covenants herein if and to the extent such breach
would have been attributable to such agreement.
SECTION 2.02 Effective Time; Closing. As soon as practicable after the
satisfaction or waiver of the conditions set forth in Article VII hereof, the
appropriate parties hereto shall execute in the manner required by the WBCL and
file with the Wisconsin Department of Financial Institutions appropriate
articles of merger relating to the Merger, and the parties shall take such other
and further actions as may be required by Law to make the Merger effective. The
time the Merger becomes effective in accordance with applicable Law is referred
to as the Effective Time. On the business day immediately preceding such filing,
a closing shall be held at the offices of Foley & Lardner, 777 East Wisconsin
Avenue, Milwaukee, WI 53202-5367, unless another date or place is agreed to in
writing by the parties hereto, for the purpose of confirming the satisfaction or
waiver, as the case may be, of the conditions set forth in Article VII.
SECTION 2.03 Effects of the Merger. The Merger shall have the effects set
forth in Section 180.1106 of the WBCL.
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SECTION 2.04 Articles of Incorporation and By-Laws of the Surviving
Corporation.
(a) Subject to Section 6.11(a) hereof, the articles of incorporation of the
Purchaser, as in effect immediately prior to the Effective Time, shall be the
articles of incorporation of the Surviving Corporation until thereafter amended
in accordance with the provisions thereof and hereof and applicable Law.
(b) Subject to Section 6.11(a) hereof, the by-laws of the Purchaser in
effect immediately prior to the Effective Time shall be the by-laws of the
Surviving Corporation until thereafter amended in accordance with the provisions
thereof and hereof and applicable Law.
SECTION 2.05 Directors. Subject to applicable Law, the directors of the
Purchaser immediately prior to the Effective Time shall be the initial directors
of the Surviving Corporation and shall hold office until their respective
successors are duly elected and qualified, or their earlier death, resignation
or removal.
SECTION 2.06 Officers. The officers of the Company immediately prior to the
Effective Time shall be the initial officers of the Surviving Corporation and
shall hold office until their respective successors are duly elected and
qualified, or their earlier death, resignation or removal.
SECTION 2.07 Additional Actions. If, at any time after the Effective Time,
the Surviving Corporation shall consider or be advised that consistent with the
terms of this Agreement any further assignments or assurances in law or any
other acts are necessary or desirable (i) to vest, perfect or confirm, of record
or otherwise, in the Surviving Corporation, title to and possession of any
property or right of either the Company or its Subsidiaries (as hereinafter
defined) acquired or to be acquired by reason of, or as a result of, the Merger,
or (ii) otherwise to carry out the purposes of this Agreement, then, subject to
the terms and conditions of this Agreement, each of the Company and its
Subsidiaries, and their officers and directors shall be deemed to have granted
to the Surviving Corporation an irrevocable power of attorney to execute and
deliver all such deeds, assignments and assurances in law and to do all acts
necessary or proper to vest, perfect or confirm title to and possession of such
property or rights in the Surviving Corporation and otherwise to carry out the
purposes of this Agreement; and the officers and directors of the Surviving
Corporation are fully authorized in the name of either the Company or its
Subsidiaries to take any and all such action.
SECTION 2.08 Conversion of Shares. At the Effective Time, by virtue of the
Merger and without any action on the part of the holders thereof, each Share
issued and outstanding immediately prior to the Effective Time (other than any
Shares held by Parent, the Purchaser, any wholly-owned subsidiary of Parent or
the Purchaser, in the treasury of the Company or by any wholly-owned subsidiary
of the Company, which Shares, by virtue of the Merger and without any action on
the part of the holder thereof, shall be canceled and retired and shall cease to
exist with no payment being made with respect thereto, and other than Dissenting
Shares (as defined in Section 3.01)) shall be converted into the right to
receive in cash the Offer Price (the "Merger Price"), payable to the holder
thereof, without interest thereon, in accordance with Article III.
SECTION 2.09 Purchaser Common Stock. Each share of common stock, par value
$1.00 per share, of the Purchaser issued and outstanding immediately prior to
the Effective Time shall, by virtue of the Merger and without any action on the
part of the holder thereof, be converted into one share of common stock of the
Surviving Corporation. Each certificate evidencing ownership of any such shares
shall, following the Merger, evidence ownership of the same number of shares of
common stock of the Surviving Corporation. Notwithstanding the foregoing, if
Parent and the Company agree to restructure the Merger as provided in Section
2.01 hereof, then the Purchaser's common stock shall not be affected in any
manner by virtue of the Merger.
SECTION 2.10 Company Option Plan. The Company shall take all actions
necessary so that, immediately following the Acceptance Date (as defined in
Section 6.11), (a) each outstanding option to purchase Common Shares (an
"Option") granted under the Company's 1987 Stock Option and Incentive Plan (the
"Option Plan"), whether or not then exercisable or vested, shall become fully
exercisable and vested, (b) each Option which is then outstanding shall be
cancelled and (c) in consideration of such cancellation, and except to the
extent that Parent or the Purchaser and the holder of any such Option otherwise
agree, immediately following the Acceptance Date, the Company, pursuant to the
terms of the Option Plan, shall promptly pay to such holders of Options an
amount in respect thereof equal to the product
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of (i) the excess of the Offer Price over the exercise price thereof and (ii)
the number of Common Shares subject thereto (such payment to be net of taxes
required by Law to be withheld with respect thereto).
SECTION 2.11 Shareholders' Meeting.
(a) If required by the Company's articles of incorporation and/or
applicable Law in order to consummate the Merger, the Company, acting through
its Board of Directors, shall, in accordance with applicable Law:
(i) duly call, give notice of, convene and hold a special meeting of
the Company's shareholders (the "Shareholders' Meeting") as soon as
practicable following the acceptance for payment of and payment for Shares
by the Purchaser pursuant to the Offer for the purpose of considering and
taking action upon this Agreement;
(ii) promptly prepare and file with the SEC a preliminary information
or proxy statement relating to the Merger and this Agreement and (x) obtain
and furnish the information required to be included by the SEC in the Proxy
Statement (as hereinafter defined) and, after consultation with Parent,
respond promptly to any comments made by the SEC with respect to the
preliminary information or proxy statement and, subject to compliance with
SEC rules and regulations, cause a notice of a special meeting and a
definitive information or proxy statement (the "Proxy Statement") to be
mailed to the shareholders of the Company no later than the time required
by applicable Law and the articles of incorporation and the by-laws of the
Company, and (y) to obtain the necessary approvals of the Merger and this
Agreement by the Shareholders; and
(iii) subject to Section 1.02(a), include in the Proxy Statement the
recommendation of the Board of Directors of the Company that the
shareholders of the Company vote in favor of the approval of the Merger and
the adoption of this Agreement.
(b) Parent and the Purchaser will furnish to the Company the information
relating to Parent and the Purchaser required under the Exchange Act and the
rules and regulations thereunder to be set forth in the Proxy Statement.
(c) The Company shall consult with Parent and the Purchaser with respect to
the Proxy Statement (and any amendments or supplements thereto) and shall afford
Parent and the Purchaser reasonable opportunity to comment thereon prior to its
finalization. If, at any time prior to the Shareholder's Meeting, any event
shall occur relating to the Company or the transactions contemplated by this
Agreement which should be set forth in an amendment or a supplement to the Proxy
Statement, the Company will promptly notify in writing Parent and the Purchaser
of such event. In such case, the Company, with the cooperation of Parent and the
Purchaser, will promptly prepare and mail such amendment or supplement and the
Company shall consult with Parent and the Purchaser with respect to such
amendment or supplement and shall afford Parent and the Purchaser reasonable
opportunity to comment thereon prior to such mailing. The Company agrees to
notify Parent and the Purchaser at least three (3) days prior to the mailing of
the Proxy Statement (or any amendment or supplement thereto) to the shareholders
of the Company.
(d) Parent agrees that it will (i) vote, or cause to be voted, all of the
Shares then owned by it, the Purchaser or any of its other subsidiaries in favor
of the approval of the Merger and the adoption of this Agreement and (ii) take
or cause to be taken all additional corporate actions necessary for the
Purchaser to adopt and approve this Agreement and the transactions contemplated
hereby.
SECTION 2.12 Merger Without Meeting of Shareholders. Notwithstanding
Section 2.11, in the event that (i) Parent, the Purchaser or any other
subsidiary of Parent shall have acquired in the aggregate at least 90% of the
outstanding Shares pursuant to the Offer (including as a result of the exercise
of the Stock Option Agreement) and prior transactions and (ii) Parent and the
Company agree to restructure the Merger as provided in Section 2.01, the parties
hereto agree, subject to Article VII, to take all necessary and appropriate
action to cause the Merger to become effective as soon as practicable after the
acceptance for payment of and payment for Shares by the Purchaser pursuant to
the Offer without a meeting of the Company's shareholders, in accordance with
Section 180.1104 of the WBCL.
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SECTION 2.13 Earliest Consummation. Each party hereto shall use its
commercially reasonable efforts to consummate the Merger as soon as practicable.
ARTICLE III
DISSENTING SHARES; PAYMENT FOR SHARES
SECTION 3.01 Dissenting Shares. Notwithstanding anything in this Agreement
to the contrary, Shares outstanding immediately prior to the Effective Time and
held by a holder who has not voted in favor of the Merger or consented thereto
in writing and who has demanded payment for such shares in accordance with
Sections 180.1301 to 180.1331 of the WBCL, if such Sections provide for
dissenters' rights for such Shares in the Merger ("Dissenting Shares"), shall
not be converted into the right to receive the Merger Price as provided in
Section 2.07, unless and until such holder fails to perfect or withdraws or
otherwise loses his or her right to dissent and demand payment under the WBCL.
If, after the Effective Time, any such holder fails to perfect or withdraws or
loses his or her right to demand payment, then such Dissenting Shares shall
thereupon be treated as if they had been converted as of the Effective Time into
the right to receive the Merger Price, if any, to which such holder is entitled,
without interest or dividends thereon, and such Shares shall no longer be
Dissenting Shares. The Company shall give Parent prompt notice of any demands
received by the Company for payment of Shares and, prior to the Effective Time,
Parent shall have the right to participate in all negotiations and proceedings
with respect to such demands. Prior to the Effective Time, the Company shall
not, except with the prior written consent of Parent, make any payment with
respect to or settle or offer to settle, any such demands.
SECTION 3.02 Payment for Shares.
(a) Prior to the commencement of the Offer, Purchaser shall appoint a
United States bank or trust company mutually acceptable to the Company and
Parent to act as paying agent (the "Paying Agent") for the payment of the Offer
Price and the Merger Price. Prior to the payment time thereof, Parent shall
deposit or shall cause to be deposited with the Paying Agent in a separate fund
established for the benefit of the holders of Shares, for payment upon surrender
of the certificates for exchange in accordance with this Article III, through
the Paying Agent (the "Payment Fund"), immediately available funds in amounts
necessary to make the payments pursuant to the Offer, Section 2.08 and this
Section 3.02 to holders (other than Shares held by the Company or any subsidiary
of the Company or Parent, Purchaser or any other subsidiary of Parent, or
holders of Dissenting Shares). The Paying Agent shall pay the Offer Price and
the Merger Price out of the Payment Fund.
From time to time at or after the Effective Time, Parent shall take all
lawful action necessary to make the appropriate cash payments, if any, to
holders of Dissenting Shares. Prior to the Effective Time, Parent shall enter
into appropriate commercial arrangements to ensure effectuation of the
immediately preceding sentence. The Paying Agent shall invest the Payment Fund
as directed by Parent or the Purchaser in obligations of, or guaranteed by, the
United States of America, in commercial paper obligations rated A-1 or P-1 or
better by Moody's Investor Services or Standard & Poor's Corporation,
respectively, or in certificates of deposit, bank repurchase agreements or
bankers' acceptances of commercial banks with capital exceeding $200 million, in
each case with maturities not exceeding seven days. Parent shall cause the
Payment Fund to be promptly replenished to the extent of any losses incurred as
a result of the aforementioned investments. All earnings thereon shall inure to
the benefit of Parent. If for any reason (including losses) the Payment Fund is
inadequate to pay the amounts to which holders of Shares shall be entitled under
Section 2.08 and this Section 3.02, Parent shall in any event be liable for
payment thereof. The Payment Fund shall not be used for any purpose except as
expressly provided in this Agreement.
(b) Promptly after the Effective Time, the Paying Agent shall mail to each
record holder of certificates (the "Certificates") that immediately prior to the
Effective Time represented Shares entitled to payment of the Merger Price
pursuant to Section 2.08 (other than Certificates representing Dissenting Shares
and Certificates representing Shares held by Parent or the Purchaser, any
wholly-owned subsidiary of Parent or the Purchaser, in the treasury of the
Company or by any wholly-owned subsidiary of the Company) (i) a form of
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letter of transmittal which shall (x) specify that delivery shall be effected,
and risk of loss and title to the Certificates shall pass, only upon proper
delivery of the Certificates to the Paying Agent, (y) contain a representation
in a form reasonably satisfactory to Parent as to the good and marketable title
of the Shares held by such holder free and clear of Lien (as hereinafter
defined), and (z) contain such other customary provisions as the Company and
Parent may reasonably specify; and (ii) instructions for use in surrendering
such Certificates and receiving the aggregate Merger Price, in respect thereof.
Upon the surrender of each such certificate and subject to applicable
withholding, the Paying Agent shall (subject to applicable abandoned property,
escheat and similar laws) pay the holder of such Certificate in respect of
Shares, the Merger Price multiplied by the number of Shares formerly represented
by such Certificate, and such Certificate shall forthwith be cancelled. Until so
surrendered, each such Certificate (other than Certificates representing
Dissenting Shares and Certificates representing Shares held by Parent or the
Purchaser, any wholly-owned subsidiary of Parent or the Purchaser, in the
treasury of the Company or by any wholly-owned subsidiary of the Company) shall
represent solely the right to receive the aggregate Merger Price relating
thereto. No interest or dividends shall be paid or accrued on the Merger Price.
If the Merger Price (or any portion thereof) is to be delivered to any person
other than the person in whose name the Certificate formerly representing such
Shares is registered, it shall be a condition to such right to receive such
Merger Price, as applicable, that the Certificate so surrendered shall be
properly endorsed or otherwise be in proper form for transfer and that the
person surrendering such Certificates shall pay to the Paying Agent any transfer
or other taxes required by reason of the payment of the Merger Price to a person
other than the registered holder of the Certificate surrendered, or shall
establish to the satisfaction of the Paying Agent that such tax has been paid or
is not applicable.
(c) Promptly following the first anniversary of the Effective Time, the
Paying Agent shall deliver to the Surviving Corporation all cash, Certificates
and other documents in its possession relating to the transactions described in
this Agreement, and the Paying Agent's duties shall terminate. Thereafter, each
holder of a Certificate formerly representing a Share may surrender such
Certificate to the Surviving Corporation and (subject to applicable abandoned
property, escheat and similar laws) receive in consideration therefor the
aggregate Merger Price, without any interest or dividends thereon.
(d) After the Effective Time, there shall be no transfers on the stock
transfer books of the Surviving Corporation of any Shares, which were
outstanding immediately prior to the Effective Time. If, after the Effective
Time, Certificates formerly representing Shares are presented to the Surviving
Corporation or the Paying Agent, they shall be surrendered and cancelled in
return for the payment of the aggregate Merger Price relating thereto, as
provided in this Article III, subject to applicable law in the case of
Dissenting Shares.
(e) Neither the Paying Agent nor any party to this Agreement shall be
liable to any shareholder of the Company or Option holder for any Shares, any
Options, the Merger Price or cash delivered to a public official pursuant to and
in accordance with any abandoned property, escheat or similar law.
(f) The Paying Agent shall be entitled to deduct and withhold from the
consideration otherwise payable pursuant to this Agreement to any shareholder of
the Company or Option holder such amounts as the Company reasonably and in good
faith determines are required to be deducted and withheld with respect to the
making of such payment under the Code (as hereinafter defined), or any provision
of state, local or foreign tax Law. To the extent that amounts are so withheld
by the Paying Agent, such withheld amounts shall be treated for all purposes of
this Agreement as having been paid to the shareholder or Option holder in
respect of which such deduction and withholding was made by the Paying Agent.
SECTION 3.03 No Further Rights or Transfers; Cancellation of Treasury
Shares. Except for the surrender of the certificate(s) representing the Common
Shares in exchange for the right to receive the Merger Price with respect to
each Common Share or the perfection of dissenters' rights with respect to the
Dissenting Shares, at and after the Effective Time, the holder of Common Shares
shall cease to have any rights as a shareholder of the Company, and no transfer
of Common Shares shall thereafter be made on the stock transfer books of the
Surviving Corporation. Each Common Share held in the Company's treasury
immediately prior to the Effective Time shall, by virtue of the Merger, be
canceled and retired and cease to exist without any conversion thereof.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and the Purchaser as
follows (with such exceptions thereto as are set forth in the disclosure
statement delivered by the Company to Parent on the date hereof (the "Company
Disclosure Statement") in which each item is specifically referenced to the
Section of Article IV to which it refers):
SECTION 4.01 Organization and Qualification; Subsidiaries. The Company is a
corporation duly organized and validly existing under the laws of the State of
Wisconsin. Each of the Company's subsidiaries (the "Subsidiaries") is a
corporation duly organized and validly existing under the laws of the
jurisdiction of its incorporation. The Company and each of the Subsidiaries has
the requisite corporate power and authority to own, operate or lease its
properties and to carry on its business as it is now being conducted, and is
duly qualified or licensed to do business, and is in good standing, in each
jurisdiction in which the nature of its business or the properties owned,
operated or leased by it makes such qualification, licensing or good standing
necessary, except where the failures to have such power or authority, or the
failures to be so qualified, licensed or in good standing, individually, and in
the aggregate, would not have a Material Adverse Effect on the Company. The term
"Material Adverse Effect on the Company", as used in this Agreement, means any
change in or effect on the business, results of operations, assets, condition
(financial or otherwise) or liabilities of the Company or any of the
Subsidiaries that is materially adverse to the Company and the Subsidiaries
taken as a whole.
SECTION 4.02 Articles of Incorporation and By-Laws. The Company has
heretofore made available to Parent and the Purchaser a complete and correct
copy of the Company's articles of incorporation and the by-laws, each as amended
to the date hereof and a copy of which is set forth in Schedule 4.02 of the
Company Disclosure Statement. Neither the Company nor the Subsidiaries are in
violation of any provision of their respective articles of incorporation or
equivalent organizational document.
SECTION 4.03 Capitalization. The authorized capital stock of the Company
consists of 20,000,000 Common Shares. As of the close of business on April 24,
1998, there were 2,918,899 Common Shares issued and outstanding. The Company has
no shares of capital stock reserved for issuance, except that, as of April 24,
1998, there were 101,847 Common Shares reserved for issuance pursuant to Options
granted pursuant to the Option Plan and 3,110,746 Common Shares reserved for
issuance pursuant to the Rights Agreement. No Shares are held by the Company as
treasury shares and no Shares have been acquired by the Company that are subject
to outstanding pledges to secure future payment of the purchase price therefor.
Except as set forth in Schedule 4.03 of the Company Disclosure Statement, since
December 31, 1997, the Company has not issued any shares of capital stock except
pursuant to the exercise of Options outstanding as of such date and pursuant to
other existing Company Benefit Plans (as hereinafter defined), in each case in
accordance with their terms. All the outstanding Common Shares are, and all
Common Shares which may be issued pursuant to the exercise of outstanding
Options and pursuant to the Stock Option Agreement will be, when issued in
accordance with the respective terms thereof, duly authorized, validly issued,
fully paid and nonassessable, except as otherwise provided in Section
180.0622(2)(b) of the WBCL. There are no bonds, debentures, notes or other
indebtedness having general voting rights (or convertible into Shares having
such rights) ("Voting Debt") of the Company or any of the Subsidiaries issued
and outstanding. Except as set forth in this Section 4.03 or Section 4.03 of the
Company Disclosure Statement and except for the Merger and the Stock Option
Agreement, there are no existing options, warrants, calls, subscriptions or
other rights, agreements, arrangements or commitments of any character, relating
to the issued or unissued capital stock of the Company or any of the
Subsidiaries, obligating the Company or any of the Subsidiaries to issue,
transfer or sell or cause to be issued, transferred or sold any shares of
capital stock or Voting Debt of, or other equity interest in, the Company or any
of the Subsidiaries or securities convertible into or exchangeable for such
shares or equity interests or obligations of the Company or any of the
Subsidiaries to grant, extend or enter into any such option, warrant, call,
subscription or other right, agreement, arrangement or commitment. Except (i) as
contemplated by the Merger contemplated by this Agreement, (ii) for the
Company's obligations under the Option Plans and (iii) for the Company's
obligations under the Stock Option Agreement, there are no
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outstanding contractual obligations of the Company or any of the Subsidiaries to
repurchase, redeem or otherwise acquire any Common Shares or the capital stock
of the Company or any of the Subsidiaries. Each of the outstanding shares of
capital stock of each of the Subsidiaries is duly authorized, validly issued,
fully paid and nonassessable, except as otherwise provided in Section
180.0622(2)(b) of the WBCL, and was not issued in violation of any preemptive
rights, and such shares of the Subsidiaries are owned by the Company or by
another Subsidiary free and clear of any lien, claim, option, charge, security
interest, limitation, encumbrance and restriction of any kind (any of the
foregoing being a "Lien"). To the knowledge of the Company, there are no voting
trusts, proxies or other agreements or understandings with respect to the voting
of the capital stock of the Company.
SECTION 4.04 Authority. The Company has all necessary corporate power and
authority to execute and deliver this Agreement and the Stock Option Agreement
and to consummate the transactions contemplated hereby and thereby. The
execution and delivery of this Agreement and the Stock Option Agreement by the
Company and the consummation by the Company of the transactions contemplated
hereby and thereby have been duly and validly authorized and approved by the
Board of Directors of the Company and no other corporate proceedings on the part
of the Company are necessary to authorize or approve this Agreement or the Stock
Option Agreement or to consummate the transactions contemplated hereby or
thereby (other than, with respect to the Merger, the approval and adoption of
the Merger and this Agreement by holders of the Shares to the extent required by
the Company's articles of incorporation and by applicable Law). This Agreement
and the Stock Option Agreement have been duly and validly executed and delivered
by the Company and, assuming the due and valid authorization, execution and
delivery of this Agreement and the Stock Option Agreement by Parent and the
Purchaser, constitute valid and binding obligations of the Company enforceable
against the Company in accordance with their respective terms, except that such
enforceability (i) may be limited by bankruptcy, insolvency, moratorium or other
similar laws affecting or relating to the enforcement of creditors' rights
generally and (ii) is subject to general principles of equity. The Board of
Directors of the Company has, at a meeting of such Board duly held on April 27,
1998, unanimously approved and adopted this Agreement, the Stock Option
Agreement, the Offer and the Merger and the other transactions contemplated
hereby and thereby, determined that the Offer Price to be received by the
holders of Shares pursuant to the Offer and the Merger is fair to the holders of
the Shares and recommends that the holders of Shares tender their Shares
pursuant to the Offer and approve and adopt this Agreement and the Merger,
subject to the Board's rights under Section 6.09 hereof.
SECTION 4.05 No Conflict; Required Filings and Consents.
(a) None of the execution and delivery of this Agreement or the Stock
Option Agreement by the Company, the consummation by the Company of the
transactions contemplated hereby or thereby or the compliance by the Company
with any of the provisions hereof or thereof will (i) conflict with or violate
the articles of incorporation or by-laws of the Company or the comparable
organizational documents of any of the Subsidiaries, (ii) conflict with or
violate any statute, ordinance, rule, regulation, order, judgment or decree
applicable to the Company or the Subsidiaries, or by which any of them or any of
their respective properties or assets may be bound or affected, or (iii) result
in a violation or breach of or constitute a default (or an event which with
notice or lapse of time or both would become a default) under, or give to others
any rights of termination, amendment, acceleration or cancellation of, or result
in any loss of any material benefit, or the creation of any Lien on any of the
property or assets of the Company or any of the Subsidiaries (any of the
foregoing referred to in clause (ii) or this clause (iii) being a "Violation")
pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument or obligation to which the
Company or any of the Subsidiaries is a party or by which the Company or any of
the Subsidiaries or any of their respective properties may be bound or affected,
except in the case of the foregoing clauses (ii) or (iii) for any Violation
which, individually and in the aggregate, would not have a Material Adverse
Effect on the Company or would not affect materially and adversely the ability
of the Company to consummate the Merger and the other transactions contemplated
by this Agreement.
(b) None of the execution and delivery of this Agreement or the Stock
Option Agreement by the Company, the consummation by the Company of the
transactions contemplated hereby or thereby or the compliance by the Company
with any of the provisions hereof or thereof will require any consent, waiver,
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<PAGE> 46
approval, authorization or permit of, or registration or filing with or
notification to (any of the foregoing being a "Consent"), any government or
subdivision thereof, or any administrative, governmental or regulatory
authority, agency, commission, tribunal or body, domestic, foreign or
supranational (a "Governmental Entity"), except for (i) compliance with any
applicable requirements of the Exchange Act, (ii) the filing of articles of
merger pursuant to the WBCL, (iii) compliance with the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), (iv) such
filings and approvals as may be required by any applicable state securities,
"blue sky" or takeover Laws, and (v) other Consents or filings the failure of
which to obtain or make, individually and in the aggregate, would not have a
Material Adverse Effect on the Company or materially adversely affect the
ability of the Company to consummate the transactions contemplated by this
Agreement and the Stock Option Agreement.
SECTION 4.06 SEC Reports and Financial Statements.
(a) The Company has filed with the SEC all forms, reports, schedules,
registration statements and definitive proxy statements required to be filed by
the Company with the SEC from December 31, 1995 until the date hereof (the "SEC
Reports"). As of their respective dates or, if amended, as of the date of the
last such amendment, the SEC Reports, including, without limitation, any
financial statements or schedules included therein, complied in all material
respects with the requirements of the Exchange Act or the Securities Act of
1933, as amended, and the rules and regulations of the SEC promulgated
thereunder applicable, as the case may be, to such SEC Reports, and none of the
SEC Reports contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances under which they were
made, not misleading.
(b) The audited consolidated balance sheets as of December 31, 1997, 1996
and 1995 and the related consolidated statements of income, shareholders' equity
and cash flows for each of the four years in the period ended December 31, 1997
(including the related notes and schedules thereto) of the Company contained in
the Company's Annual Reports on Form 10-K for the years ended December 31, 1997
and 1996 included in the SEC Reports present fairly, in all material respects,
the consolidated financial position and the consolidated results of operations
and cash flows of the Company and its consolidated subsidiaries as of the dates
or for the periods presented therein in conformity with generally accepted
accounting principles ("GAAP") applied on a consistent basis during the periods
involved (except as may be indicated in the notes thereto).
(c) The accounting books and records of the Company and its Subsidiaries:
(i) are in all material respects correct and complete; (ii) are current in a
manner consistent with past practice; and (iii) to the knowledge of the Company,
have recorded therein all the properties, assets and liabilities of the Company
and its Subsidiaries (except where the failure to so record would not violate
GAAP as consistently applied by the Company).
SECTION 4.07 Information. None of the information supplied by the Company
in writing specifically for inclusion or incorporation by reference in (i) the
Offer Documents, (ii) the Schedule 14D-9, (iii) the Proxy Statement or (iv) any
other document to be filed with the SEC or any other Governmental Entity in
connection with the transactions contemplated by this Agreement (the "Other
Filings") will, at the respective times filed with the SEC or other Governmental
Entity and, in addition, in the case of the Proxy Statement, at the date it or
any amendment or supplement is mailed to the shareholders of the Company, at the
time of the Shareholders' Meeting and at the Effective Time, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements made therein, in
light of the circumstances under which they were made, not misleading. The Proxy
Statement will comply as to form in all material respects with the provisions of
the Exchange Act and the rules and regulations thereunder, except that no
representation is made by the Company with respect to statements made therein
based on information supplied by Parent or the Purchaser in writing specifically
for inclusion in the Proxy Statement.
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SECTION 4.08 Tax Matters.
(a) Tax Returns. For all years for which the applicable statutory period of
limitation has not expired, and except to the extent that failures, individually
or in the aggregate, would not have a Material Adverse Effect on the Company,
(i) the Company has filed all Tax Returns (as hereinafter defined) that it was
required to file and all such Tax Returns were correct and complete in all
material respects, (ii) all Taxes (as hereinafter defined) owed by the Company
(whether or not shown on any Tax Return) have been paid, except for Taxes as set
forth on the balance sheet dated as of December 31, 1997 or which have arisen
after December 31, 1997 in the ordinary course of the Company's trade or
business and (iii) there are no Liens on any of the assets of the Company that
arose in connection with any failure (or alleged failure) to pay any Tax. In
particular, and without in any manner limiting the foregoing and except to the
extent that failures, individually or in the aggregate, would not have a
Material Adverse Effect on the Company, (i) none of the foregoing Tax Returns
contain any position which is or would be subject to penalties under Section
6662 of the Internal Revenue Code of 1986, as amended (the "Code"), (or any
corresponding provision of state, local or foreign Tax law), (ii) no Tax
deficiencies have been proposed or assessed against the Company, (iii) to the
knowledge of the Company, no issue has been raised in any prior Tax audit of the
Company which, by application of the same or similar principles, could
reasonably be expected upon a future Tax audit of the Company to result in a
proposed deficiency for any period, and (iv) the Company is not liable for any
Taxes attributable to any other person, whether by reason of being a member of
another affiliated group, being a party to a tax sharing agreement, as a
transferee or successor, or otherwise. As used herein, the term "Tax" means any
federal, state, local, or foreign income, gross receipts, license, payroll,
employment, excise, severance, stamp, occupation, premium, windfall profits,
environmental, customs duties, capital stock, franchise, profits, withholding,
social security (or similar), unemployment, disability, real property, personal
property, sales, use, transfer, registration, value added, alternative or add-on
minimum, estimated, or other tax of any kind whatsoever, including any interest,
penalty, or addition thereto; and the term "Tax Return" means any return,
declaration, report, claim for refund, or information return or statement
relating to Taxes, including any schedule or attachment thereto, and including
any amendment thereof.
(b) Other Representations. Except as set forth in Schedule 4.08 of the
Company Disclosure Statement, the Company has not (i) filed any consent or
agreement under Section 341(f) of the Code, (ii) applied for any tax ruling
within the last three years, (iii) entered into a closing agreement with any
taxing authority within the last three years, (iv) filed an election under
Section 338(g) or Section 338(h)(10) of the Code (nor has a deemed election
under Section 338(e) of the Code occurred), (v) made any payments, or been a
party to an agreement (including this Agreement) that under any circumstances
could obligate it to make payments, that will not be deductible because of
Section 280G of the Code, or (vi) been a party to any tax allocation or tax
sharing agreement for any year for which the applicable statutory period of
limitations has not expired. Company is not a "United States real property
holding company" within the meaning of Section 897 of the Code.
SECTION 4.09 No Litigation. Except as set forth in Schedule 4.09 of the
Company Disclosure Statement, as of the date hereof, there is no action, suit,
claim, workers compensation claim, arbitration, product warranty claim,
proceeding, investigation or inquiry, whether civil, criminal or administrative
("Litigation"), pending or, to the knowledge of the Company or the Subsidiaries,
threatened against the Company or the Subsidiaries, their respective businesses
or any of their assets, or, to the knowledge of the Company and if and to the
extent the Company is, through indemnity or otherwise, liable therefor, any of
the Company's current or former directors or officers or any other person whom
the Company has agreed to indemnify, as such, nor does the Company or the
Subsidiaries know, or have grounds to know, of any basis for any Litigation,
that would have in all of the cases above, individually or in the aggregate, a
Material Adverse Effect on the Company. As of date hereof, there are no such
actions, suits or proceedings pending or, to the knowledge of the Company,
threatened, against the Company by any person which question the legality,
validity or propriety of the transactions contemplated by this Agreement. There
are no outstanding orders, judgments, injunctions, awards or decrees of any
Governmental Entity against the Company, any of its or its properties, assets or
business, or, to the knowledge of the Company, any of the Company's current or
former
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directors or officers or any other person whom the Company has agreed to
indemnify, as such, that could reasonably be expected to have, individually or
in the aggregate, a Material Adverse Effect on the Company.
SECTION 4.10 Compliance With Applicable Laws.
(a) Non-Environmental Matters. The Company and the Subsidiaries are in
compliance with all applicable laws, ordinances, rules or regulations
(collectively, "Laws") and orders, writs, injunctions, judgments, plans or
decrees (collectively, "Orders") (except, in each case, with respect to
environmental matters which are governed by Section 4.10(b) hereof) of any
Governmental Entity, except for such failures to so comply which, individually
and in the aggregate, would not have a Material Adverse Effect on the Company.
The business operations of the Company and the Subsidiaries are not being
conducted in violation of any Law or Order of any Governmental Entity (except,
in each case, with respect to environmental matters which are governed by
Section 4.10(b) hereof), except for possible violations which, individually or
in the aggregate, would not have a Material Adverse Effect on the Company.
(b) Environmental Matters. Except for the matters identified in Schedule
4.10 of the Company Disclosure Statement or except as would not reasonably be
expected to have a Material Adverse Effect on the Company, (i) no real property
currently or, to the knowledge of the Company, formerly owned, leased, operated,
managed or controlled by the Company or any Subsidiary has been contaminated
with any Hazardous Substances to an extent or in a manner or condition now
requiring investigation, removal, corrective action, or remediation, or that
could be reasonably likely to result in liability of, or costs to, the Company
or any of the Subsidiaries, under any Environmental Law (as hereinafter
defined), (ii) no judicial or administrative proceeding is pending or, to the
knowledge of the Company, threatened relating to liability for any off-site
disposal or contamination, (iii) there is currently no civil, criminal, or
administrative action, suit, demand, hearing, notice of violation,
investigation, notice or demand letter, or request for information pending, or,
to the knowledge of the Company, threatened, under any Environmental Law against
the Company or any of the Subsidiaries, the Company and the Subsidiaries have
not received in writing any claims or notices alleging liability under any
Environmental Law, and the Company has no knowledge of any circumstances that
would reasonably be expected to result in such claims, (iv) the Company and each
of the Subsidiaries are currently in compliance, and within the period of
applicable statutes of limitation, have complied, with all applicable
Environmental Laws, (v) no property or facility currently or, to the Company's
knowledge as of the date hereof, formerly owned, leased, operated, managed or
controlled by the Company or any of the Subsidiaries is listed or proposed for
listing on the National Priorities List or the Comprehensive Environmental
Response, Compensation and Liability Information System, both promulgated under
the Comprehensive Environmental Response, Compensation & Liability Act, as
amended, or on any comparable state or foreign list established under any
Environmental Law and (vi) each of the Company and its Subsidiaries has obtained
all environmental, health and safety permits and governmental authorizations
required for its operations, and such permits are in good standing and each of
the Company and its Subsidiaries is in substantial compliance with all items and
conditions thereof. "Environmental Law" means any applicable federal, national,
foreign, state or local Laws relating to noise, odor, Hazardous Substances,
pollution, human health and safety or the protection of the environment.
"Hazardous Substance" means any pollutant, contaminant or toxic or hazardous
substance or constituent that is defined or regulated by or under authority of
any Environmental Law, including without limitation any petroleum products,
asbestos or polychlorinated biphenyls, and any other substance that can give
rise to liability under any Environmental Law.
SECTION 4.11 Labor Matters.
(a) Certain Agreements. Except as set forth in Schedule 4.11 of the Company
Disclosure Statement, neither the Company nor any Subsidiary is a party to any
collective bargaining agreement. The employment agreements that have been
entered into by either the Company or any Subsidiary are set forth in Schedule
4.11 of the Company Disclosure Statement.
(b) Labor Disputes. Except as set forth in Schedule 4.11 of the Company
Disclosure Statement and except to the extent that failures, individually or in
the aggregate, would not have a Material Adverse Effect on the Company: (i)
there are no pending or, to the knowledge of the Company, threatened and
unresolved
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claims by any person against the Company or its Subsidiaries arising out of any
statute, ordinance or regulation relating to unfair labor practices,
discrimination or to employees or employee practices or occupational or safety
and health standards; (ii) there is no pending, nor has the Company or its
Subsidiaries experienced any, labor dispute, strike or organized work stoppage
within the last three years; and (iii) to the knowledge of the Company, there is
no threatened labor dispute, strike or organized work stoppage against the
Company or its Subsidiaries.
(c) Union Matters. As of the date hereof, except as set forth in Schedule
4.11 of the Company Disclosure Statement: (i) to the knowledge of the Company,
no union organizing activities are in process or have been proposed or
threatened involving any employees of the Company or its Subsidiaries and (ii)
no petitions have been filed or, to the knowledge of the Company, have been
threatened or proposed to be filed, for union organization or representation or
employees of the Company or its Subsidiaries not presently organized.
SECTION 4.12 Employee Benefit Plans.
(a) Disclosure and Claims. Schedule 4.12 of the Company Disclosure
Statement lists each employee benefit plan (within the meaning of Section 3(3)
of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
each employment contract, stock option, profit sharing, stock appreciation
right, phantom stock, restricted stock, severance, vacation, termination or
other compensation plan, program, arrangement or understanding maintained or
contributed to by the Company or the Subsidiaries, or with respect to which the
Company or any Subsidiary or any Company ERISA Affiliate (as defined below)
could incur material liability (the "Company Benefit Plans"). The Company has
delivered or made available to Parent a true and complete copy of each material
Company Benefit Plan and the most recent Form 5500 (including all attached
schedules) filed with respect to each applicable Company Benefit Plan and the
most recent actuarial or financial valuation reports prepared with respect to
any Company Benefit Plan. No Company Benefit Plan is a "multiemployer plan" (as
defined in Section 4001 of ERISA), and neither the Company nor any Subsidiary
has ever contributed nor been obligated to contribute to any such multiemployer
plan. There is no pending or, to the knowledge of the Company, threatened
dispute, controversy, investigation or claim concerning the Company Benefit
Plans other than that would not be reasonably likely to have a Material Adverse
Effect on the Company. "Company ERISA Affiliate" shall mean any person which,
together with the Company, would be deemed a "single employer" within the
meaning of Section 4001 of ERISA.
(b) Determination Letters. The Internal Revenue Service has issued a
favorable determination letter with respect to each Company Benefit Plan, that
is intended to be a "qualified plan" within the meaning of Section 401(a) of the
Code, and as of the date thereof, to the knowledge of the Company, there are no
circumstances nor any events that have occurred that would materially adversely
affect the qualified status of any such plan or the related trust.
(c) Compliance. The Company and the Subsidiaries and the Company Benefit
Plans are in compliance in all material respects with all provisions of ERISA,
the Code and all other laws and regulations applicable to the Company Benefit
Plans. There does not now exist, nor do any circumstances now exist that could
reasonably be expected to result in, any material liability of the Company or
any Subsidiary under (i) Title IV of ERISA, (ii) Section 302 of ERISA, (iii)
Sections 412 and 4971 of the Code, (iv) Section 4980B of the Code or Sections
502 or 601-608 of ERISA, or (v) any other Laws or Orders with respect to any
Company Benefit Plan, other than claims for benefits under such plans. With
respect to each Company Benefit Plan subject to Title IV or Section 302 of ERISA
or Section 412 or 4971 of the Code: (i) there does not exist any accumulated
funding deficiency within the meaning of Section 412 of the Code or Section 302
of ERISA, whether or not waived, and (ii) no reportable event within the meaning
of Section 4043(c) of ERISA and no event described in Section 4062 or 4063 of
ERISA has occurred.
(d) Post-Retirement Benefits. No Company Benefit Plan provides material
benefits, including, without limitation, death or medical benefits (whether or
not insured), with respect to current or former employees of the Company or any
Subsidiary beyond their retirement or other termination of service, other than
(i) coverage mandated by applicable Laws, (ii) death benefits or retirement
benefits under any "employee
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pension benefit plan" as defined in Section 3(2) of ERISA, (iii) deferred
compensation benefits accrued as liabilities on the books of the Company or a
Subsidiary, (iv) benefits the full cost of which is borne by the current or
former employee (or his or her beneficiary), or (v) medical and dental benefits
for former employees (as set forth in Schedule 4.12 of the Company Disclosure
Schedule).
(e) Funding. Except with respect to the Hein-Werner Hourly and
Incentive-Rated Employees' Pension Plan (the "Hourly Plan"), the current value
of the assets of each of the Company Benefit Plans that is subject to Title IV
of ERISA, determined as of the date of the most recently completed actuarial
valuation, exceeds the actuarial present value of benefit obligations as of such
date based upon the actuarial assumptions presently used for funding purposes in
the most recent actuarial report prepared by such Company Benefit Plan's actuary
with respect to such Company Benefit Plan. According to the most recently
completed actuarial valuation with respect to the Hourly Plan, as of the date of
such valuation, the actuarial present value of benefit obligations under the
Hourly Plan exceeded the actuarial value of assets by $389,902. All
contributions or other amounts payable by the Company or its Subsidiaries as of
the Effective Time with respect to each Company Benefit Plan in respect of
current or prior plan years have been either paid or accrued on the December 31,
1997 consolidated balance sheet of the Company. There are no material pending
or, to the knowledge of the Company, threatened or anticipated claims (other
than routine claims for benefits) by, on behalf of or against any of the Company
Benefit Plans or any trusts related thereto.
(f) Other Plan Obligations. To the knowledge of the Company, neither the
Company nor any of its Subsidiaries, nor any Company ERISA Affiliate, nor any
Company Benefit Plan, nor any trust created thereunder, nor any trustee or
administrator thereof has engaged in a transaction in connection with which the
Company or its Subsidiaries or any Company ERISA Affiliate, any Company Benefit
Plan, any such trust, or any trustee or administrator thereof, or any party
dealing with any Company Benefit Plan or any such trust could be subject to
either a civil penalty assessed pursuant to Section 409 or 502(i) of ERISA or a
tax imposed pursuant to Section 4975 or 4976 of the Code.
SECTION 4.13 Intellectual Property. Except for the matters identified in
Schedule 4.13 of the Company Disclosure Schedule or except as would not,
individually and in the aggregate, have a Material Adverse Effect on the
Company, (i) the Company and each of the Subsidiaries owns, has the right to
acquire or is licensed or otherwise has the right to use (in each case, clear of
any Liens), all Intellectual Property (as defined below) used in or necessary
for the conduct of its business as currently conducted, (ii) no claims are
pending or, to the knowledge of the Company, threatened that the Company or any
of the Subsidiaries is infringing on or otherwise violating the rights of any
person with regard to any Intellectual Property and (iii) to the knowledge of
the Company, no person is infringing on or otherwise violating any right of the
Company or any of the Subsidiaries with respect to any Intellectual Property
owned by and/or licensed to the Company or the Subsidiaries. For purposes of
this Agreement, "Intellectual Property" shall mean (i) any invention, United
States and foreign patents, pending patent applications, trade names, trade
dress, logos, corporate names, trademarks, service marks, trademark
registrations, service mark registrations, pending trademark applications,
pending service mark applications, registered copyrights, and pending copyright
applications, together with all translations, adaptations, derivations, and
combinations thereof and including all goodwill associated therewith, and all
applications, registrations, and renewals in connection therewith; (ii)
proprietary software; and (iii) all trade secrets and confidential business
information (including ideas, research and development, know-how, formulas,
compositions, manufacturing and production processes and techniques, technical
data, designs, drawings, specifications, customer and supplier lists, pricing
and cost information, and business and marketing plans and proposals).
SECTION 4.14 Certain Events.
(a) Since December 31, 1997, there has not been any Material Adverse Effect
on the Company. In addition, since December 31, 1997, except as set forth in
Schedule 4.14 of the Company Disclosure
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Statement, the Company and the Subsidiaries have conducted their businesses only
in the ordinary course of business consistent with past practices and there has
not been, directly or indirectly:
(i) any payment or granting by the Company or any of the Subsidiaries
of any increase in compensation to any director or executive officer of the
Company or, except in the ordinary course of business and consistent with
past practice, any employee of the Company or the Subsidiaries;
(ii) any granting by the Company or any of the Subsidiaries to any
such director, executive officer or employee of any increase in severance
or termination pay, except as required under employment, severance or
termination agreements or plans in effect prior to the date of this
Agreement;
(iii) any entry by the Company or any of the Subsidiaries into any
employment, severance or termination agreement with any such director or
executive officer;
(iv) any adoption or increase in payments to or benefits under any
Company Benefit Plans;
(v) any change in accounting methods, principles or practices by the
Company and the Subsidiaries, except insofar as may have been required by a
change in GAAP;
(vi) any declaration or payment of any dividend or any distribution in
respect of the capital stock of the Company or any direct or indirect
redemption, purchase or other acquisition of any such stock of the Company;
or
(vii) any agreement or commitment to do any of the things described in
the preceding clauses (i) through (vi).
(b) Except as set forth in Schedule 4.14 of the Company Disclosure
Statement, since December 31, 1997 and through the date hereof:
(i) no party (including the Company and its Subsidiaries) has
accelerated, terminated, modified in any material respect, or cancelled any
Contract (other than purchase and sales orders in the ordinary course of
business in accordance with past practice) involving more than $100,000 to
which the Company or its Subsidiaries is a party or by which any of them is
bound;
(ii) neither the Company nor any of its Subsidiaries has (other than
in the ordinary course of business) granted any license or sublicense of
any rights under or with respect to any Intellectual Property;
(iii) neither the Company nor any of Subsidiaries has experienced any
material damage, destruction, or loss (whether or not covered by insurance)
from fire or other casualty to its tangible property; or
(iv) neither the Company nor any of its Subsidiaries has entered into
a binding commitment to any of the foregoing.
"Contracts" shall mean all of the contracts, agreements and obligations,
written or oral, to which the Company or its Subsidiaries are a party or by
which the Company or its Subsidiaries or any of their respective assets are
bound, including, without limitation, any loan, bond, mortgage, indenture, lease
instrument, franchise or license.
SECTION 4.15 Certain Approvals. The Board of Directors of the Company has
taken appropriate action such that, assuming the accuracy of Parent's and the
Purchaser's representations in Section 5.08 of this Agreement, the provisions of
Sections 180.1140 through 180.1144 of the WBCL will not apply to any of the
transactions contemplated by this Agreement and the Stock Option Agreement.
SECTION 4.16 Brokers. Except for the engagement of Credit Suisse First
Boston Corporation ("CSFB"), none of the Company, the Subsidiaries, or any of
their respective officers, directors or employees has employed any broker or
finder or incurred any liability for any brokerage fees, commission or finder's
fees in connection with the transactions contemplated by this Agreement or the
Stock Option Agreement.
SECTION 4.17 Opinion of Financial Advisor. The Company has received the
written opinion of CSFB, dated April 27, 1998, to the effect that, as of such
date, the cash consideration to be received by the holders of
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the Common Shares pursuant to the Offer and the Merger is fair to such holders
from a financial point of view.
SECTION 4.18 Rights Agreement. Assuming the accuracy of Parent's and the
Purchaser's representations in Section 5.08 of this Agreement, neither the
execution nor the delivery of this Agreement nor commencement of the Offer will
result in a "Distribution Date" (as defined in the Rights Agreement). The
Company has irrevocably taken all actions necessary to make the Rights
inapplicable to (a) the Offer and the Merger and (b) the Stock Option Agreement
and the transactions contemplated thereby.
SECTION 4.19 Title to Assets. All of the material real property owned or
leased by each of the Company and its Subsidiaries are identified in the SEC
Reports (the "Real Estate"). Each of the Company and its Subsidiaries owns fee
simple or valid leasehold (as the case may be) title to the Real Estate and has
valid title to its other tangible assets and properties which it owns, free and
clear of any and all Liens, except for any such as would not, individually or in
the aggregate, have a Material Adverse Effect on the Company.
SECTION 4.20 Buildings and Equipment. Except as set forth in Schedule 4.20
of the Company Disclosure Statement or except for any such as would not have a
Material Adverse Effect on the Company: (i) neither the Company nor any of its
Subsidiaries has received any written notice from any Governmental Entity that
any of the Buildings or Equipment (each as defined below) fail to comply with
any applicable building and zoning or other similar Laws in effect at the date
hereof which notice is still outstanding and (ii) the continuation of the
Company's and its Subsidiaries' businesses as currently conducted will not
result in the enforcement or the threat of enforcement of any such Laws.
"Buildings" shall mean all buildings, fixtures, structures and improvements
leased or owned by the Company or its Subsidiaries. "Equipment" shall mean all
machinery, equipment, boilers, furniture, fixtures, motor vehicles, furnishings,
parts, tools, office equipment, computers and other items of tangible personal
property owned or used by the Company or its Subsidiaries.
SECTION 4.21 Vote Required. Assuming the accuracy of Parent's and the
Purchaser's representations in Section 5.08 of this Agreement and subject to
Sections 180.1130-180.1133 of the WBCL, the affirmative vote of the holders of
at least two-thirds (2/3rds) of the outstanding Common Shares entitled to vote
with respect to the Merger is the only vote of the holders of any class or
series of the Company's capital stock necessary to approve the Merger, this
Agreement and the transactions contemplated hereby.
SECTION 4.22 Certain Agreements. Except as set forth in Schedule 4.22 of
the Company Disclosure Statement, neither the Company nor any of its
Subsidiaries is a party to any oral or written agreement or plan, including any
stock option plan, stock appreciation rights plan, restricted stock plan or
stock purchase plan, any of the benefits of which will be increased, or the
vesting of the benefits of which will be accelerated, by the occurrence of any
of the transactions contemplated by this Agreement or the value of any of the
benefits of which will be calculated on the basis of any of the transactions
contemplated by this Agreement. Except as described in Schedule 4.22 of the
Company Disclosure Statement or except for any such as would not result in a
Material Adverse Effect on the Company, the transactions contemplated by this
Agreement will not constitute a "change of control" under, require the consent
from or the giving of notice to any third party pursuant to, or accelerate the
vesting or repurchase rights under, the terms, conditions or provisions of any
loan or credit agreement, note, bond, mortgage, indenture, license, lease,
contract, agreement or other instrument or obligation to which the Company or
its Subsidiaries is a party or by which any of them or any of their properties
or assets may be bound. Except as set forth in Schedule 4.22 of the Company
Disclosure Statement, there are no amounts payable by the Company or its
Subsidiaries to any officers of the Company or its Subsidiaries (in their
capacity as officers) as a result of the transactions contemplated by this
Agreement and/or any subsequent employment termination.
SECTION 4.23 Applicability of Articles of Incorporation. The Board of
Directors of the Company has taken such action as may be necessary to ensure
that the supermajority vote provision of Article VII of the Company's articles
of incorporation is inapplicable to the Offer or the Merger, or to this
Agreement or the transactions contemplated hereby.
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SECTION 4.24 Contracts. Except as set forth in Section 4.24 of the Company
Disclosure Statement, the Company does not have any Contract in effect as of the
date hereof which purports to limit in any respect the manner in which, or the
localities in which, the Company, its Subsidiaries or any other entity is
entitled to conduct all or any portion of its business. There are no existing
breaches or defaults by the Company or its Subsidiaries, or, to the knowledge of
the Company, any other party to a Contract under any Contract the effect of
which would constitute a Material Adverse Effect on the Company and, to the
knowledge of the Company, no event has occurred which, with the passage of time
or the giving of notice or both, could reasonably be expected to constitute such
a breach or default.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND THE PURCHASER
Parent and the Purchaser jointly and severally represent and warrant to the
Company as follows:
SECTION 5.01 Organization and Qualification. Parent is a corporation duly
organized, validly existing and in good standing under the laws of Delaware. The
Purchaser is a corporation duly organized and validly existing under the laws of
the State of Wisconsin. Each of Parent and the Purchaser has the requisite
corporate power and authority to own, operate or lease its properties and to
carry on its business as it is now being conducted, and is duly qualified or
licensed to do business, and is in good standing, in each jurisdiction in which
the nature of its business or the properties owned, operated or leased by it
makes such qualification, licensing or good standing necessary, except where the
failure to have such power or authority, or the failure to be so qualified,
licensed or in good standing, would not have a Material Adverse Effect on
Parent. The term "Material Adverse Effect on Parent", as used in this Agreement,
means any change in or effect on the business, results of operations, assets,
condition (financial or otherwise) or liabilities of Parent or any of its
subsidiaries that would be materially adverse to Parent and its subsidiaries
taken as a whole, except for any change or effect resulting from general
economic or financial market conditions.
SECTION 5.02 Authority. Each of Parent and the Purchaser has all necessary
corporate power and authority to execute and deliver this Agreement and the
Stock Option Agreement and to consummate the transactions contemplated hereby
and thereby. The execution and delivery of this Agreement and the Stock Option
Agreement by Parent and the Purchaser and the consummation by Parent and the
Purchaser of the transactions contemplated hereby and thereby have been duly and
validly authorized and approved by the Boards of Directors of Parent and the
Purchaser and by the sole shareholder of the Purchaser and no other corporate
proceedings on the part of Parent or the Purchaser are necessary to authorize or
approve this Agreement or the Stock Option Agreement or to consummate the
transactions contemplated hereby or thereby. Each of this Agreement and the
Stock Option Agreement has been duly executed and delivered by each of Parent
and the Purchaser and, assuming the due and valid authorization, execution and
delivery by the Company, constitutes a valid and binding obligation of each of
Parent and the Purchaser enforceable against each of them in accordance with its
respective terms, except that such enforceability (i) may be limited by
bankruptcy, insolvency, moratorium or other similar laws affecting or relating
to the enforcement of creditors' rights generally and (ii) is subject to general
principles of equity.
SECTION 5.03 No Conflict; Required Filings and Consents.
(a) None of the execution and delivery of this Agreement or the Stock
Option Agreement by Parent or the Purchaser, the consummation by Parent or the
Purchaser of the transactions contemplated hereby or thereby or the compliance
by Parent or the Purchaser with any of the provisions hereof or thereof will (i)
conflict with or violate the organizational documents of Parent or the
Purchaser, (ii) conflict with or violate any statute, ordinance, rule,
regulation, order, judgment or decree applicable to Parent or the Purchaser, or
any of their subsidiaries, or by which any of them or any of their respective
properties or assets may be bound or affected, or (iii) result in a Violation
pursuant to any note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument or obligation to which Parent or
the Purchaser, or any of their respective subsidiaries, is a party or by which
any of their respective properties or assets may be bound or affected, except in
the case of the foregoing clauses (ii) and (iii) for any such
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Violations which would not have a Material Adverse Effect on Parent or
materially adversely affect the ability of Parent or the Purchaser to consummate
the transactions contemplated by this Agreement and the Stock Option Agreement.
(b) None of the execution and delivery of this Agreement or the Stock
Option Agreement by Parent and the Purchaser, the consummation by Parent and the
Purchaser of the transactions contemplated hereby or thereby or the compliance
by Parent and the Purchaser with any of the provisions hereof or thereof will
require any Consent of any Governmental Entity, except for (i) compliance with
any applicable requirements of the Exchange Act, (ii) the filing of articles of
merger pursuant to the WBCL, (iii) compliance with the HSR Act, (iv) such
filings and approvals as may be required by any applicable state securities,
"blue sky" or takeover Laws, and (v) other Consents or filings the failure of
which to obtain or make, individually and in the aggregate, would not have a
Material Adverse Effect on Parent or materially adversely affect the ability of
Parent or the Purchaser to consummate the transactions contemplated by this
Agreement or the Stock Option Agreement.
SECTION 5.04 Information. None of the information supplied or to be
supplied by Parent and the Purchaser in writing specifically for inclusion in
(i) the Offer Documents, (ii) the Schedule 14D-9, (iii) the Proxy Statement or
(iv) the Other Filings will, at the respective times filed with the SEC or such
other Governmental Entity and, in addition, in the case of the Proxy Statement,
at the date it or any amendment or supplement is mailed to shareholders of the
Company, at the time of the Shareholders' Meeting and at the Effective Time,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
made therein, in light of the circumstances under which they were made, not
misleading.
SECTION 5.05 Financing. Parent or the Purchaser has available the funds
necessary to consummate the Offer and the Merger and the transactions
contemplated hereby on a timely basis.
SECTION 5.06 Brokers. Except for the engagement of Merrill Lynch & Co.,
none of Parent, the Purchaser, or any of their respective subsidiaries,
officers, directors or employees, has employed any broker or finder or incurred
any liability for any brokerage fees, commissions or finder's fees in connection
with the transactions contemplated by this Agreement or the Stock Option
Agreement for or with respect to which the Company is or might be liable.
SECTION 5.07 Purchaser.
(a) Parent owns all of the outstanding stock of Purchaser; at all times
prior to the Merger, no person other than Parent has owned, or will own, any of
the outstanding stock of Purchaser. Purchaser was formed by Parent solely for
the purpose of engaging in the transactions contemplated by this Agreement.
(b) There are not as of the date of this Agreement, and there will not be
at the Effective Time, any outstanding or authorized options, warrants, calls,
rights, commitments or any other agreements of any character which Purchaser is
a party to, or may be bound by, requiring it to issue, transfer, sell, purchase,
redeem or acquire any shares of its capital stock or any securities or rights
convertible into, exchangeable for, or evidencing the right to subscribe for or
acquire, any shares of its capital stock.
(c) As of the date of this Agreement and the Effective Time, except for
obligations incurred in connection with this Agreement or the transactions
contemplated hereby, Purchaser has not and will not have incurred, directly or
indirectly through any other corporation, any obligations or liabilities of any
kind or engaged in any activities of any type or kind whatsoever or entered into
any arrangement or arrangements with any person or entity.
SECTION 5.08 Share Ownership. During the period from September 10, 1987 to
the date hereof, neither Parent, the Purchaser nor any of their affiliates have
owned 10% or more of the Shares.
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ARTICLE VI
COVENANTS
SECTION 6.01 Conduct of Business of the Company. Except as required by this
Agreement or with the prior written consent of Parent, during the period from
the date of this Agreement to the Effective Time, the Company will and will
cause each of the Subsidiaries to conduct its operations only in the ordinary
course of business consistent with past practice and will use its commercially
reasonable efforts and will cause each of the Subsidiaries to use its
commercially reasonable efforts, to preserve intact the business organization of
the Company and each of the Subsidiaries, to use, operate, maintain and repair
all of its assets and properties in a normal business manner consistent with
past practice, to keep available the services of its and their present officers
and key employees and to preserve the goodwill of those having business
relationships with it and to conduct business with suppliers, customers,
creditors and others having business relationships with the Company in the best
interests of the Company. Without limiting the generality to the foregoing, and
except as otherwise required or contemplated by this Agreement or the Stock
Option Agreement or as set forth in Section 6.01 of the Company Disclosure
Statement, the Company will not, and will not permit any of the Subsidiaries to,
prior to the Effective Time, without the prior written consent of Parent:
(a) adopt any amendment to its charter or by-laws or comparable
organizational documents;
(b) issue, reissue or sell or authorize the issuance, reissuance or sale of
additional shares of capital stock of any class, or shares convertible into
capital stock of any class, or any rights, warrants or options to acquire any
convertible shares or capital stock, other than the issuance of Shares pursuant
to Options outstanding on the date of this Agreement or pursuant to the Stock
Option Agreement;
(c) declare, set aside or pay any dividend or other distribution (whether
in cash, shares or property or any combination thereof) in respect of any class
or series of its capital stock other than between any of the Company and any
Subsidiary which is wholly-owned by the Company;
(d) split, combine, subdivide, reclassify or directly or indirectly redeem,
purchase or otherwise acquire, recapitalize or reclassify, or propose to redeem
or purchase or otherwise acquire, any shares of its capital stock, or any of its
other shares or liquidate in whole or in part;
(e) except for (A) increases in salary, wages and benefits of non-executive
officers or employees of the Company or the Subsidiaries in the ordinary course
of business consistent with past practice, (B) increases in salary, wages and
benefits granted to officers and employees of the Company or the Subsidiaries in
conjunction with new hires in the ordinary course of business consistent with
past practice, or (C) increases in salary, wages and benefits to employees of
the Company or the Subsidiaries pursuant to collective bargaining agreements
entered into in the ordinary course of business consistent with past practice,
(i) increase the compensation or fringe benefits payable or to become payable to
its directors, officers or key employees (whether from the Company or any of the
Subsidiaries), (ii) pay any benefit not required by any existing plan or
arrangement (including, without limitation, the granting of stock options, stock
appreciation rights, shares of restricted stock or performance units), (iii)
grant any severance or termination pay to (except pursuant to existing
agreements, plans or policies and as required by such agreements, plans or
polices), (iv) enter into or modify any employment or severance agreement with,
any director, officer or other key employee of the Company or any of the
Subsidiaries or (v) establish, adopt, enter into, or amend any collective
bargaining, bonus, profit sharing, thrift, compensation, stock option,
restricted stock or Company Benefit Plans for the benefit or welfare of any
directors, officers or current or former employees, except in each case to the
extent required by applicable Law or regulation;
(f) (i) sell, lease, transfer or assign any of its assets, tangible or
intangible, other than for a fair consideration in the ordinary course of
business and other than the disposition of obsolete or unusable property; (ii)
enter into any Contract (other than purchase and sales orders in the ordinary
course of business in accordance with past practice) involving more than $25,000
without the consent of Parent (which consent shall not be unreasonably
withheld); (iii) accelerate, terminate, modify in any material respect, or
cancel any Contract (other than purchase and sales orders and other than in the
ordinary course of business in accordance with past practice) involving more
than $25,000 to which the Company is a party or by which any of them is
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bound without the consent of Parent (which consent shall not be unreasonably
withheld; (iv) make any capital expenditure (or series of related capital
expenditures) involving either more than $25,000 (unless such expenditure is
identified in the current business plan of the Company as disclosed to Parent)
or outside the ordinary course of business; (v) delay or postpone the payment of
accounts payable and other liabilities outside the ordinary course of business;
(vi) cancel, compromise, waive or release any right or claim (or series of
related rights and claims) not covered by the reserves or accruals relating to
such claim in the Company's December 31, 1997 consolidated balance sheet either
involving more than $25,000 or outside the ordinary course of business without
the consent of Parent (which consent shall not be unreasonably withheld); (vii)
grant any license or sublicense of any rights under or with respect to any
Intellectual Property other than in the ordinary course of business; or (viii)
enter into any contract or agreement with any affiliate of the Company except
for transactions in the ordinary course of business upon commercially reasonable
terms.
(g) (i) incur, assume or pre-pay any long-term debt or incur or assume any
short-term debt, except that the Company and the Subsidiaries may incur, assume
or pre-pay debt in the ordinary course of business consistent with past practice
under existing lines of credit, (ii) pay, discharge, settle or satisfy as other
claims, liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than in the ordinary course of business
consistent with past practice, (iii) assume, guarantee, endorse or otherwise
become liable or responsible (whether directly, contingently or otherwise) for
the obligations of any other person, or (iv) make any loans, advances or capital
contributions to, or investments in, any other person except in the ordinary
course of business consistent with past practice and except for loans, advances,
capital contributions or investments between any Subsidiary wholly-owned by the
Company and the Company or another Subsidiary wholly-owned by the Company; or
(h) agree in writing or otherwise to take any of the foregoing actions.
SECTION 6.02 Access to Information. From the date hereof until the
Effective Time, the Company will, and will cause the Subsidiaries, and each of
its and their respective officers, directors, employees, counsel, advisors and
representatives (collectively, the "Company Representatives") to, (i) provide
Parent and the Purchaser and their respective officers, employees, counsel,
advisors and representatives (collectively, the "Parent Representatives")
access, during normal business hours and upon reasonable notice, to the offices
and other facilities and to the books, records, financial statements and other
documents and materials relating to the financial condition, assets and
liabilities of the Company and the Subsidiaries, and will permit Parent and the
Purchaser to make inspections of such as either of them may reasonably require,
(ii) cause the Company Representatives and the Subsidiaries to furnish Parent,
the Purchaser and the Parent Representatives to the extent available with such
other information with respect to the business of the Company and the
Subsidiaries as Parent and the Purchaser may from time to time reasonably
request and (iii) confer and consult with the Parent Representatives, as Parent
may reasonably request, to report on operational matters, financial matters and
the general status of ongoing business operations of the Company; provided,
however, that all requests for such access, inspection, information or
consultations pursuant to this Section 6.02 shall be made through the President
and Chief Executive Officer of the Company or such other person as he shall
designate in writing to Parent. Unless otherwise required by Law and except as
is necessary to disseminate the Offer Documents, Parent and the Purchaser will,
and will cause the Parent Representatives to hold any such information in
confidence until such time as such information otherwise becomes publicly
available through no wrongful act of Parent, the Purchaser or the Parent
Representative, all as specifically provided in the confidentiality agreement,
dated April 21, 1998, between Parent and the Company (the "Confidentiality
Agreement").
SECTION 6.03 Commercially Reasonable Efforts. Subject to the terms and
conditions herein provided and to applicable legal requirements, so long as this
Agreement has not been terminated, each of the parties hereto agrees to use its
commercially reasonable efforts to take, or cause to be taken, all action, and
to do, or cause to be done, consistent with the fiduciary duties of such party's
respective Board of Directors, and to assist and cooperate with the other
parties hereto in doing, as promptly as practicable, all things necessary,
proper or advisable under applicable Laws and regulations to ensure that the
conditions set forth in Annex I and Article VII are satisfied and to consummate
and make effective the transactions contemplated by the Offer, the Merger, this
Agreement and the Stock Option Agreement, including, without limitation, to make
promptly their respective filings and thereafter to make any other submissions
required under applicable Laws.
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In addition, if at any time prior to the Effective Time any event or
circumstance relating to either the Company or Parent or the Purchaser or any of
their respective subsidiaries should be discovered by the Company or Parent, as
the case may be, and which should be set forth in an amendment to the Offer
Documents or Schedule 14D-9, the discovering party will promptly inform the
other party of such event or circumstance and promptly take all steps necessary
to cause the Offer Documents or the Schedule 14D-9, as the case may be, as so
corrected to be filed with the SEC and to be disseminated to the shareholders of
the Company, in each case as to the extent required by applicable Law. If at any
time after the Effective Time any further action is necessary or desirable to
carry out the purposes of this Agreement or the Stock Option Agreement,
including the execution of additional instruments, the proper officers and
directors of each party to this Agreement or the Stock Option Agreement, as the
case may be, shall take all such necessary action.
SECTION 6.04 Consents.
(a) Subject to the terms and conditions herein provided, the Company will
(i) take all reasonable steps necessary or desirable, and proceed diligently and
in good faith and use all commercially reasonable efforts to obtain all
approvals required by any Contract to consummate the transactions contemplated
hereby, (ii) take all reasonable steps necessary or desirable, and proceed
diligently and in good faith and use all commercially reasonable efforts to
obtain all approvals, authorizations, and clearances of any Governmental Entity
required of the Company to permit the Company to consummate the transactions
contemplated hereby, (iii) provide such other information and communications to
such Governmental Entity as such entity may reasonably request, and (iv)
cooperate with Parent in obtaining all approvals, authorizations and clearances
of Governmental Entities and others required of Parent to consummate the
transactions contemplated by this Agreement or the Stock Option Agreement.
(b) Each of the parties will use its commercially reasonable efforts to
obtain as promptly as practicable all Consents of any Governmental Entity or any
other person required in connection with the consummation of the transactions
contemplated by the Offer, the Merger, this Agreement and the Stock Option
Agreement.
(c) Any party hereto shall promptly inform the others of any material
communication from the United States Federal Trade Commission, the Department of
Justice or any other domestic government or governmental authority regarding any
of the transactions contemplated by this Agreement or the Stock Option
Agreement. If any party or any affiliate thereof receives a request for
additional information or documentary material from any such government or
authority with respect to the transactions contemplated by this Agreement or the
Stock Option Agreement, then such party will endeavor in good faith to make, or
cause to be made, as soon as reasonably practicable and after consultation with
the other party, an appropriate response in compliance with such request. Parent
will advise the Company promptly in respect of any understandings, undertakings
or agreements (oral or written) which Parent proposes to make or enter into with
the Federal Trade Commission, the Department of Justice or any other domestic or
foreign government or governmental or multinational authority in connection with
the transactions contemplated by this Agreement or the Stock Option Agreement.
SECTION 6.05 Public Announcements. So long as this Agreement is in effect,
Parent, the Purchaser and the Company agree to consult with each other before
issuing any press release or otherwise making any public statement with respect
to the transactions contemplated by this Agreement.
SECTION 6.06 Employee Benefit Arrangements.
(a) Following the Effective Time and through December 31, 1999, the
Purchaser agrees to provide employee benefit plans and programs for the benefit
of employees of the Company and the Subsidiaries (excluding plans or programs
which provide for issuance of Shares or options on Shares) that are of
reasonably equivalent value to such employees as compared with the Company
Benefit Plans, subject to applicable governmental rules and regulations. All
service credited to each employee by the Company or any Subsidiary through the
Effective Time shall be recognized by the Purchaser for purposes of eligibility
and vesting (but not benefit accrual) under any employee benefit plan provided
by the Purchaser for the benefit of the employees.
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(b) Parent shall cause the Surviving Corporation to honor (without
modification) and assume all written employment agreements with individual
employees, severance agreements with individual employees and other comparable
agreements with individual employees of the Company or any Subsidiary, all as in
effect on the date of this Agreement (including, without limitation, the
Consulting Agreement between the Company and J. Queenan), all of which are
listed on Schedule 6.06 of the Company Disclosure Statement.
(c) The Purchaser shall maintain in effect the Company severance
plan/program (as specified in the employee handbook) for a period of two years
immediately following the Effective Time and the Company severance plan/program
shall not be terminated or adversely amended during such two-year period.
(d) The Company shall cause the interest of each of the employees of the
Company and the Subsidiaries as of the Acceptance Date (as hereinafter defined)
in the Hein-Werner Retirement and Savings Plan and Trust to be fully vested and
nonforfeitable as of the Acceptance Date.
(e) For a period of 18 months following the Effective Time, Parent shall
cause the Surviving Corporation to continue to provide medical insurance, at
COBRA premium rates, to O. Friend.
SECTION 6.07 Company Disclosure Statement. The Company has delivered to
Parent the Company Disclosure Statement which shall be accompanied by a
certificate signed by the President and the Secretary of the Company stating
that the Company Disclosure Schedule was delivered pursuant to this Agreement
and is the Company Disclosure Schedule referred to in this Agreement. The
Company Disclosure Schedule is deemed to constitute an integral part of this
Agreement and to modify, as specified, the representations, warranties,
covenants or agreements of the Company contained in this Agreement.
SECTION 6.08 Deliveries of Information. From time to time after the date of
this Agreement and prior to the Effective Time (unless this Agreement is
terminated), the Company shall furnish promptly to Parent:
(a) a copy of each report, schedule and other document filed by the Company
or received by the Company after the date of this Agreement pursuant to the
requirements of federal or state securities Laws promptly after such documents
are available; and
(b) the monthly consolidated financial statements of the Company (as
prepared by the Company in accordance with its normal accounting procedures)
promptly after such financial statements are available.
SECTION 6.09 No Solicitation.
(a) The Company represents and warrants to, and covenants and agrees with,
Parent and the Purchaser that neither the Company nor any of the Subsidiaries
has any agreement, arrangement or understanding with any potential acquiror
that, directly or indirectly, would be violated, or require any payments, by
reason of the execution, delivery and/or consummation of this Agreement and the
Stock Option Agreement. The Company shall, shall cause the Subsidiaries to, and
shall use its commercially reasonable efforts to cause the officers, directors,
employees, investment bankers, attorneys and other agents and representatives of
the Company and the Subsidiaries to, immediately cease any existing activities,
information exchanges, discussions or negotiations with any person (including a
"person" as defined in Section 13(d)(3) of the Exchange Act) other than Parent
or the Purchaser (a "Third Party") heretofore conducted with respect to any
Acquisition Transaction (as hereinafter defined). The Company shall not, shall
cause the Subsidiaries not to, and shall use its commercially reasonable efforts
to cause the officers, directors, employees, investment bankers, attorneys and
other agents and representatives of the Company and the Subsidiaries not to,
directly or indirectly, (x) solicit, initiate, continue, facilitate or encourage
(including by way of furnishing or disclosing non-public information) any
inquiries, proposals or offers from any Third Party with respect to, or that
could reasonably be expected to lead to, any acquisition or purchase of all or
any significant portion of the assets or business of, or any significant equity
interest in (including by way of a tender offer), or any merger, consolidation
or business combination with, or any similar transaction involving, the Company
or any of the Subsidiaries (the foregoing being referred to collectively as an
"Acquisition Transaction"), or (y) negotiate or otherwise communicate in any way
with any Third Party with respect to any Acquisition Transaction or enter into,
approve or recommend any agreement, arrangement or understanding requiring the
Company to abandon, terminate or fail to consummate the Offer and/or the Merger
or any other transaction contemplated hereby or by the Stock
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Option Agreement. Notwithstanding anything to the contrary in the foregoing, the
Company may in response to an unsolicited written proposal with respect to an
Acquisition Transaction involving the acquisition of all of the Shares (or all
or substantially all of the assets of the Company and the Subsidiaries) from a
Third Party furnish or disclose non-public information to such Third Party and
negotiate or otherwise communicate with such Third Party, in each case only if
(A) the Board of Directors of the Company (after consultation with its outside
legal counsel and independent financial advisors) determines in good faith that
such proposal would reasonably be likely to be more favorable to the Company and
its shareholders than the transactions contemplated hereby (the proposal with
respect to an Acquisition Transaction meeting the requirements of clause (A), a
"Superior Proposal"), (B) prior to furnishing or disclosing any non-public
information to, or entering into discussions or negotiations with, such Third
Party, the Company receives from such Third Party a customary confidentiality
agreement similar in all material respects to the Confidentiality Agreement, and
(C) the Company advises Parent of all such non-public information delivered to
such Third Party prior to such delivery; provided, however, that the Company
shall not enter into a definitive agreement with respect to a Superior Proposal
unless the Company first complies with Section 6.09(b) hereof, including the
last sentence thereof, and then unless the Company concurrently terminates this
Agreement in accordance with the terms hereof.
(b) The Company shall promptly (but in any event within one business day of
the Company becoming aware of same) advise Parent of the receipt by the Company,
any of the Subsidiaries or any of the Company's investment bankers, attorneys or
other agents or representatives of any inquiries or proposals relating to an
Acquisition Transaction and any actions taken pursuant to Section 6.09(a). The
Company shall promptly (but in any event within one business day of the Company
becoming aware of same) provide Parent with a copy of any such inquiry or
proposal in writing and a written statement with respect to any such inquiries
or proposals not in writing, which statement shall include the identity of the
parties making such inquiries or proposal and the material terms thereof and
will update Parent on an ongoing basis, or upon Parent's reasonable request, of
the status thereof; provided, however, that the Company shall not be obligated
to provide a copy of, or a written statement with respect to, any such inquiry
if the Board of Directors of the Company determines in good faith, after
consultation with outside legal counsel, that not providing such copy or written
statement is necessary to allow the Board of Directors of the Company to fulfill
its fiduciary duties to the shareholders of the Company under applicable Law.
For the avoidance of doubt, the Company agrees that it will not terminate this
Agreement and enter into any agreement with respect an Acquisition Transaction
unless and until Parent has been given the opportunity at least two business
days prior to the entering into such agreement to match the terms of such
agreement.
(c) Nothing contained in this Section 6.09 shall prohibit the Company from
disclosing to its shareholders a position contemplated by Rules 14d-9 and
14e-2(a) promulgated under the Exchange Act or from making any disclosure to its
shareholders if, in the good faith judgment of its Board of Directors, after
consultation with outside legal counsel, failure to so disclose would result in
a violation of applicable Law.
SECTION 6.10 Notification of Certain Matters. Parent and the Company shall
promptly notify each other of (a) the occurrence or non-occurrence of any fact
or event which would be reasonably likely (i) to cause any representation or
warranty contained in this Agreement or the Stock Option Agreement to be untrue
or inaccurate in any material respect at any time from the date hereof to the
Effective Time or (ii) to cause any covenant, condition or agreement hereunder
or under the Stock Option Agreement not to be complied with or satisfied in all
material respects and (b) any failure of the Company, Parent or the Purchaser,
as the case may be, to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it hereunder or under the Stock
Option Agreement in any material respect; provided, however, that no such
notification shall affect the representations or warranties of any party or the
conditions to the obligations of any party hereunder or under the Stock Option
Agreement.
SECTION 6.11 Indemnification and Insurance.
(a) The Purchaser and Parent agree that for a period of six years from the
date the Shares are purchased by Parent or the Purchaser in the Offer (the
"Acceptance Date"), the Purchaser will maintain all rights to indemnification
now existing in favor of the current or former directors, officers, employees,
fiduciaries and
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agents of the Company as provided in the Company's articles of incorporation and
by-laws or otherwise in effect under any agreement on the date of this
Agreement. In addition, the Purchaser and Parent agree that the articles of
incorporation and by-laws of the Surviving Corporation shall contain the
provisions with respect to indemnification set forth in the Company's articles
of incorporation and by-laws on the date hereof, which provisions shall not be
amended, repealed or otherwise modified for a period of six years after the
Acceptance Date in any manner that would adversely affect the rights thereunder
of individuals who at any time prior to the Effective Time were directors or
officers of the Company in respect of actions or omissions occurring at or prior
to the Effective Time (including, without limitation, the transactions
contemplated by this Agreement), unless such modification is required by Law.
Notwithstanding the six-year period specified in the foregoing sentences, in the
event any claim or claims are asserted or made within such six-year period, all
rights to indemnification in respect of any such claim or claims shall continue
until disposition of any and all such claims.
(b) The Surviving Corporation will at all times exercise the powers granted
to it by its articles of incorporation, its by-laws, and by applicable Law to
indemnify and hold harmless to the fullest extent possible present or former
directors, officers, employees, fiduciaries and agents of the Company against
any threatened or actual claim, action, suit, proceeding or investigation made
against them arising from their service in such capacities (or service in such
capacities for another enterprise at the request of the Company) prior to, and
including the Acceptance Date, including, without limitation, with respect to
matters relating to this Agreement.
(c) Parent agrees that the Company and, from and after the Acceptance Date,
the Surviving Corporation shall cause to be maintained in effect for not less
than six years from the Acceptance Date the current policies of the directors'
and officers' liability insurance maintained by the Company with respect to
matters occurring at or prior to the Effective Time (including, without
limitation, the transactions contemplated by this Agreement); provided that the
Surviving Corporation may substitute therefor policies of at least the same
coverage containing terms and conditions which are no less advantageous and
provided that such substitution shall not result in any gaps or lapses in
coverage with respect to matters occurring prior to the Effective Time; and
provided, further, that the Surviving Corporation shall not be required to pay
an annual premium in excess of 200% of the last annual premium paid by the
Company prior to the date hereof and if the Surviving Corporation is unable to
obtain the insurance required by this Section 6.11(c) it shall obtain as much
comparable insurance as possible for an annual premium equal to such maximum
amount.
(d) This Section 6.11 is intended to benefit the current and former
directors, officers, employees, fiduciaries and agents of the Company and shall
be binding on all successors and assigns of Parent, the Purchaser, the Company
and the Surviving Corporation.
ARTICLE VII
CONDITIONS TO CONSUMMATION OF THE MERGER
SECTION 7.01 Conditions to Each Party's Obligation to Effect the Merger If
the Offer Shall Have Been Consummated. The respective obligations of Parent, the
Purchaser and the Company to consummate the Merger if the Offer shall have been
consummated are subject to the satisfaction or waiver in writing by each party
hereto at or before the Effective Time, of each of the following conditions:
(a) Shareholder Approval. The Shareholders shall have duly approved the
transactions contemplated by this Agreement, to the extent required pursuant to
the requirements of the Company's articles of incorporation and applicable Law.
(b) Purchase of Shares. The Purchaser shall have accepted for payment and
paid for Shares pursuant to the Offer in accordance with the terms hereof;
provided, that this condition shall be deemed to have been satisfied with
respect to Parent and the Purchaser if the Purchaser fails to accept for payment
or pay for Shares pursuant to the Offer in violation of the terms of the Offer.
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(c) Injunctions; Illegality. The consummation of the Merger shall not be
restrained, enjoined or prohibited by any order, judgment, decree, injunction or
ruling of a court of competent jurisdiction or any Governmental Entity, and
there shall not have been any statute, rule or regulation enacted, promulgated
or deemed applicable to the Merger by any Governmental Entity that prevents the
consummation of the Merger.
SECTION 7.02 Condition to Parent's and the Purchaser's Obligation to Effect
the Merger. The obligations of Parent and the Purchaser to consummate the Merger
are further subject to the fulfillment of the condition that all actions
contemplated by Section 2.10 hereto shall have been taken, which may be waived
in whole or in part by Parent or the Purchaser.
ARTICLE VIII
TERMINATION; AMENDMENTS; WAIVER
SECTION 8.01 Termination. This Agreement may be terminated and the Merger
contemplated hereby may be abandoned at any time prior to the Effective Time,
whether or not approval thereof by the shareholders of the Company has been
obtained:
(a) by the mutual written consent of Parent, the Purchaser and the Company
prior to the date on which Parent's designees constitute a majority of the Board
of Directors of the Company; or
(b) by the Company if the Company is not in material breach of any of its
representations, warranties, covenants or arrangements contained in this
Agreement and the Stock Option Agreement and if (i) the Purchaser fails to
commence the Offer as provided in Section 1.01 hereof, (ii) the Purchaser shall
not have accepted for payment and paid for Shares pursuant to the Offer in
accordance with the terms thereof on or before August 31, 1998 or (iii) the
Purchaser fails to purchase validly tendered Shares in violation of the terms of
the Offer or this Agreement; or
(c) by Parent or the Company if the Offer expires or is terminated or
withdrawn pursuant to its terms without any Shares being purchased thereunder;
provided, however, that Parent may terminate this Agreement pursuant to this
Section 8.01(c) upon the termination or withdrawal of the Offer only if Parent's
or the Purchaser's termination or withdrawal of the Offer is not in violation of
the terms of this Agreement or the Offer; or
(d) by Parent or the Company if any court or other Governmental Entity
shall have issued, enacted, entered, promulgated or enforced any order,
judgment, decree, injunction, or ruling or taken any other action restraining,
enjoining or otherwise prohibiting the Merger and such order, judgment, decree
injunction, ruling or other action shall have become final and nonappealable; or
(e) by the Company if, prior to the purchase of Shares pursuant to the
Offer in accordance with the terms of this Agreement, (i) there shall have
occurred, on the part of Parent or the Purchaser, a material breach of any
representation, warranty, covenant or agreement contained in this Agreement
which is not curable or, if curable, is not cured within 30 days after written
notice of such breach is given by the Company to the party committing the
breach, except in any case, such failures which are not reasonably likely to
affect adversely Parent's or the Purchaser's ability to complete the Offer or
the Merger, or (ii) the Company enters into a definitive agreement with respect
to a Superior Proposal as permitted under Section 6.09(a) hereof and after
complying with the provisions of Section 6.09(b) hereof and making the payments
referred to in Section 8.03(b) hereof; or
(f) by Parent if, prior to the purchase of Shares pursuant to the Offer in
accordance with the terms of this Agreement, (i) there shall have occurred, on
the part of the Company, a breach of any representation, warranty, covenant or
agreement contained in this Agreement which individually, or in the aggregate,
if not cured would be reasonably likely to have a Material Adverse Effect on the
Company and which is not curable or, if curable, is not cured within the later
of (x) 30 days after written notice of such breach is given by Parent to the
Company and (y) the satisfaction of all conditions to the Offer not related to
such breach or (ii) the Board of Directors of the Company or committee thereof
shall have withdrawn or modified (or shall have resolved to withdraw or modify),
in a manner adverse to Parent, its approval or recommendation of this
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Agreement or any of the transactions contemplated hereby and the Board of
Directors of the Company and such committee shall not have fully reinstated such
approval or recommendations within three business days after a request by Parent
to so reinstate or shall have recommended (or resolved to recommend) an
Acquisition Transaction (other than the Offer and Merger) to the shareholders of
the Company; or
(g) by Parent if it is not in material breach of its obligation hereunder
or under the Offer and no Shares shall have been purchased pursuant to the Offer
on or before August 31, 1998.
SECTION 8.02 Effect of Termination. In the event of the termination of this
Agreement pursuant to Section 8.01, this Agreement shall forthwith become void
and have no effect, without any liability on the part of any party or its
directors, officers or shareholders of the Company, other than the provisions of
this Section 8.02, Section 8.03 and the last sentence of Section 6.02, which
shall survive any such termination. Nothing contained in this Section 8.02 shall
relieve any party from liability for any breach of this Agreement or the
Confidentiality Agreement.
SECTION 8.03 Fees and Expenses.
(a) Subject to Section 8.03(b), whether or not the Merger is consummated,
all costs and expenses incurred in connection with the Offer, this Agreement,
the Stock Option Agreement and the transactions contemplated by this Agreement
and the Stock Option Agreement shall be paid by the party incurring such
expenses.
(b) Parent and the Company agree that (i) in the event this Agreement is
terminated pursuant to Section 8.01(e)(ii) or (ii) in the event that (x) any
person shall have publicly disclosed a proposal regarding an Acquisition
Transaction and (y) following such disclosure, either (a) August 31, 1998 occurs
without the shareholder approval of the Merger being obtained (other than as a
result of a material breach hereof by Parent or the Purchaser that has not been
cured within the time period set forth in Article VIII of this Agreement) or (b)
the Company breaches (prior to the time that the designees of the Purchaser
constitute a majority of the Board of Directors of the Company) any of its
material obligations hereunder and does not cure such breach within the time
period set forth in Article VIII of this Agreement or (c) the Agreement is
terminated pursuant to Section 8.01(f)(ii), and (z) not later than twelve months
after any such termination the Company shall have entered into a definitive
agreement for an Acquisition Transaction, or an Acquisition Transaction shall
have been consummated, then the Company shall pay to an account designated by
Parent a termination fee, in immediately available funds, of $1,000,000 (the
"Termination Fee") and shall reimburse Parent for out-of-pocket fees and
expenses (but in no event greater than $350,000) reasonably incurred by Parent
and the Purchaser in connection with this Agreement, the Offer and the Merger.
The Termination Fee and any reimbursement of expenses shall be paid prior to,
and shall be a condition to the effectiveness of, any termination of this
Agreement referred to in clause (i) above or on the next business day after the
earlier of such Acquisition Transaction being consummated or a definitive
agreement for such Acquisition Transaction being entered into, if such fee and
expenses are payable as a result of clause (ii) above.
SECTION 8.04 Amendment. Subject to Section 1.03(c), this Agreement may be
amended by the Company, Parent and the Purchaser at any time before or after any
approval of this Agreement by the shareholders of the Company but, after any
such approval, no amendment shall be made which decreases the Merger Price or
which adversely affects the rights of the shareholders of the Company hereunder
without the requisite affirmative vote of such shareholders; provided, however,
that this Agreement shall not be amended after the time, if ever, that the
Purchaser's designees constitute a majority of the Board of Directors of the
Company. This Agreement may not be amended except by an instrument in writing
signed on behalf of all the parties.
SECTION 8.05 Extension; Waiver. Subject to Section 1.03(c), at any time
prior to the Effective Time, the parties hereto may (i) extend the time for the
performance of any of the obligations or other acts of any other party hereto,
(ii) waive any inaccuracies in the representations and warranties contained
herein by any other party or in any document, certificate or writing delivered
pursuant hereto by any other party or (iii) waive compliance with any of the
agreements of any other party or with any conditions to its own obligations, it
being understood that the other conditions set forth in Annex I may be waived by
Parent and the
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Purchaser without the consent of the Company. Any agreement on the part of any
party to any such extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01 Non-Survival of Representations and Warranties. The
representations and warranties made in this Agreement shall not survive beyond
the Effective Time.
SECTION 9.02 Entire Agreement; Assignment.
(a) This Agreement (including the documents and the instruments referred to
herein) and the Confidentiality Agreement constitute the entire agreement and
supersede all prior agreements and understandings, both written and oral, among
the parties with respect to the subject matter hereof and thereof.
(b) Neither this Agreement nor any of the rights, interests or obligations
hereunder may be assigned by any of the parties hereto (whether by operation of
law or otherwise) without the prior written consent of the other party. Subject
to the preceding sentence, this Agreement will be binding upon, inure to the
benefit of and be enforceable by the parties and their respective successors and
assigns. This Agreement is not intended to confer upon any person other than
Parent, the Purchaser and the Company any rights or remedies hereunder.
SECTION 9.03 Validity. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, each of which shall remain in full force and
effect.
SECTION 9.04 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given when delivered in person, by overnight courier or facsimile to the
respective parties as follows:
If to Parent or the Purchaser:
Snap-on Incorporated
10801 Corporate Drive
Kenosha, Wisconsin 53141
Attention: Susan F. Marrinan
Fax: (414) 656-5165
with a copy to:
Skadden, Arps, Slate, Meagher & Flom (Illinois)
333 West Wacker Drive
Chicago, Illinois 60606
Attention: William R. Kunkel
Fax: (312) 407-0411
If to the Company:
Hein-Werner Corporation
2020 Pewaukee Road
Waukesha, Wisconsin 53188
Attention: Joseph L. Dindorf
Fax: (414) 542-7890
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with a copy to:
Foley & Lardner
777 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
Attention: Maurice J. McSweeney
Jay O. Rothman
Fax: (414) 297-4900
or to such other address as the person to whom notice is given may have
previously furnished to the other in writing in the manner set forth above
(provided that notice of any change of address shall be effective only upon
receipt thereof).
SECTION 9.05 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Wisconsin, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof.
SECTION 9.06 Descriptive Headings. The descriptive headings herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
SECTION 9.07 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
SECTION 9.08 Obligation of Parent. Whenever this Agreement requires the
Purchaser or the Surviving Corporation to take any action, such requirement
shall be deemed to include an undertaking on the part of Parent to cause the
Purchaser or the Surviving Corporation to take such action and a guarantee of
the performance thereof.
SECTION 9.09 Certain Definitions. As used in this Agreement:
(a) the term "affiliate", as applied to any person shall mean any other
person directly or indirectly controlling, controlled by, or under common
control with, that person. For the purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as applied to any person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of that person, whether through the
ownership of voting shares, by contract or otherwise;
(b) the term "person" shall include individuals, corporations,
partnerships, trusts, other entities and groups (which term shall include a
"group" as such term is defined in Section 13(d)(3) of the Exchange Act); and
(c) the term "subsidiary" or "subsidiaries" means, with respect to Parent,
the Company or any other person, any corporation, partnership, joint venture or
other legal entity of which Parent, the Company or such other person, as the
case may be (either alone or through or together with any other subsidiary),
owns, directly or indirectly, stock or other equity interests the holders of
which are generally entitled to more than 50% of the vote for the election of
the board of directors or other governing body of such corporation or other
legal entity.
SECTION 9.10 SPECIFIC PERFORMANCE. THE PARTIES HERETO AGREE THAT
IRREPARABLE DAMAGE WOULD OCCUR IN THE EVENT THAT ANY OF THE PROVISIONS OF THIS
AGREEMENT WERE NOT PERFORMED IN ACCORDANCE WITH THEIR SPECIFIC TERMS OR WERE
OTHERWISE BREACHED. IT IS ACCORDINGLY AGREED THAT THE PARTIES SHALL BE ENTITLED
TO AN INJUNCTION OR INJUNCTIONS TO PREVENT BREACHES OF THIS AGREEMENT AND TO
ENFORCE SPECIFICALLY THE TERMS AND PROVISIONS HEREOF IN ANY COURT OF THE UNITED
STATES OR ANY STATE HAVING JURISDICTION, THIS BEING IN ADDITION TO ANY OTHER
REMEDY TO WHICH THEY ARE ENTITLED AT LAW OR IN EQUITY.
SECTION 9.11 Interpretation. Unless the context requires otherwise, all
words used in this Agreement in the singular number shall extend to and include
the plural, all words in the plural number shall extend to and include the
singular, and all words in any gender shall extend to and include all genders.
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SECTION 9.12 No Third Party Beneficiary. Except as provided pursuant to
Section 6.11 hereof, the terms and provisions of this Agreement are intended
solely for the benefit of the parties hereto and their respective successors and
assigns and it is not the intention of the parties to confer third-party
beneficiary rights upon any other person.
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its respective officer thereunto duly authorized, all
as of the day and year first above written.
SNAP-ON INCORPORATED
("Parent")
By: /s/ ROBERT A. CORNOG
------------------------------------
Name: Robert A. Cornog
Title: Chairman, President and
Chief Executive Officer
SNAP-ON PACE COMPANY
(the "Purchaser")
By: /s/ SUSAN F. MARRINAN
------------------------------------
Name: Susan F. Marrinan
Title: Vice President and Secretary
HEIN-WERNER CORPORATION
(the "Company")
By: /s/ JOSEPH L. DINDORF
------------------------------------
Name: Joseph L. Dindorf
Title: President and Chief Executive
Officer
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CONDITIONS TO THE OFFER. Notwithstanding any other provisions of the Offer,
the Purchaser shall not be required to accept for payment or pay for any
tendered Shares if (i) any applicable waiting period under the HSR Act has not
expired or terminated or (ii) the Minimum Condition has not been satisfied, and
the Purchaser may, subject to the terms of the Merger Agreement, amend the Offer
or postpone the acceptance for payment of tendered Shares if at any time on or
after the date of the Merger Agreement and before the expiration of the Offer,
any of the following events shall occur:
(a) there shall be threatened or pending any suit, action or proceeding by
a Governmental Entity against the Purchaser, Parent or the Company (i) seeking
to prohibit or impose any material limitations on Parent's or the Purchaser's
ownership or operation (or that of Parent's subsidiaries or affiliates) of any
or a material portion of their or the Company's businesses or assets, or to
compel Parent or the Purchaser or Parent's subsidiaries and affiliates to
dispose of or hold separate any material portion of the business or assets of
the Company or Parent and Parent's subsidiaries, in each case taken as a whole,
(ii) challenging the acquisition by Parent or the Purchaser of any Shares under
the Offer, seeking to restrain or prohibit the making or consummation of the
Offer or the Merger or the performance of any of the other transactions
contemplated by the Merger Agreement or the Stock Option Agreement, or seeking
to obtain from the Company, Parent or the Purchaser any damages that are
material in relation to the Company, (iii) seeking to impose material
limitations on the ability of the Purchaser, or render the Purchaser unable, to
accept for payment, pay for or purchase some or all of the Shares pursuant to
the Offer, the Merger or the Stock Option Agreement, or (iv) seeking to impose
material limitations on the ability of the Purchaser or Parent effectively to
exercise full rights of ownership of the Shares, including, without limitation,
the right to vote the Shares purchased by it on all matters properly presented
to the Company's shareholders; or
(b) any Law is enacted, entered, enforced, promulgated or deemed applicable
to the Offer or the Merger or the transactions contemplated by the Stock Option
Agreement, or any other action is taken by any Governmental Entity, other than
the application to the Offer, the Merger or the transactions contemplated by the
Stock Option Agreement of applicable waiting periods under the HSR Act, that
results, directly or indirectly, in any of the consequences referred to in
clauses (i) through (iv) of paragraph (a) above; or
(c) (i) the Board of Directors of the Company or any committee thereof
withdraws or modifies in a manner adverse to Parent or the Purchaser its
approval or recommendation of the Offer, the Merger, the Merger Agreement or the
Stock Option Agreement or approves or recommends any Acquisition Transaction, or
(ii) the Company enters into any agreement to consummate any Acquisition
Transaction; or
(d) any of the representations and warranties of the Company set forth in
the Merger Agreement that are qualified as to Material Adverse Effect are not
true and correct, or any such representations and warranties that are not so
qualified are not true and correct in any respect (when taken together with all
other failures of such representations and warranties to be true and correct)
that would have a Material Adverse Effect on the Company, in each case at the
date of the Merger Agreement or at the scheduled expiration of the Offer (as
though made as of such date, except that those representations and warranties
that address matters only as of a particular date shall remain true and correct
as of such date); or
(e) the Merger Agreement shall have been terminated in accordance with its
terms; or
(f) the Company shall have failed to perform any obligation or to comply
with any agreement or covenant to be performed or complied with by it under the
Merger Agreement or the Stock Option Agreement other than any failure which
would not have, either individually or in the aggregate, a Material Adverse
Effect on the Company; or
(g) any person acquires beneficial ownership (as defined in Rule 13d-3
promulgated under the Exchange Act) of at least 20% of the outstanding Shares
(other than any person not required to file a Schedule 13D under the rules
promulgated under the Exchange Act or other than pursuant to the Stock Option
Agreement); or
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(h) there shall have occurred, and continued to exist, (i) any general
suspension of, or limitation on prices for, trading in securities on the New
York Stock Exchange or the American Stock Exchange, (ii) a declaration of a
banking moratorium or any suspension of payments in respect of banks in the
United States, (iii) a commencement of a war, armed hostilities or other
national or international calamity directly involving the United States (other
than an action involving solely United Nations personnel or support of United
Nations' personnel), or (iv) in the case of any of the events described in the
foregoing clauses (i) through (iii) existing at the time of the commencement of
the Offer, a material acceleration or worsening thereof.
The foregoing conditions are for the sole benefit of Parent and the Purchaser
and may be asserted by Parent or the Purchaser regardless of the circumstances
giving rise to any such condition (including any action or inaction by Parent or
the Purchaser not in violation of the Merger Agreement) and may be waived by
Parent or the Purchaser in whole or in part at any time and from time to time in
their sole discretion. The failure by Parent or the Purchaser at any time to
exercise any of the foregoing rights shall not be deemed a waiver of any such
right and each such right shall be deemed an ongoing right which may be asserted
at any time and from time to time.
The capitalized terms used in this Annex I shall have the meanings set
forth in the Agreement to which it is annexed, except that the term "Merger
Agreement" shall be deemed to refer to the Agreement to which this Annex I is
appended.
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[CREDIT SUISSE FIRST BOSTON LOGO]
CREDIT SUISSE FIRST BOSTON CORPORATION
227 West Monroe Street Telephone 312
750 3000
Chicago, IL 60606-5018
ANNEX II
Board of Directors
Hein-Werner Corporation
2210 Pewaukee Road
Waukesha, Wisconsin 53188
April 27, 1998
Dear Sirs:
You have asked us to advise you with respect to the fairness to the
stockholders of Hein-Werner Corporation (the "Company") from a financial point
of view of the consideration to be received by such stockholders pursuant to the
terms of the Agreement and Plan of Merger, dated as of April 26, 1998 (the
"Merger Agreement"), among the Company, Snap-on Incorporated (the "Parent") and
Snap-on Pace Company (the "Purchaser"). The Merger Agreement provides for the
commencement by the Purchaser of a tender offer (the "Offer") to purchase all of
the issued and outstanding shares of common stock of the Company, par value
$1.00 per share, together with associated rights (together, the "Shares"), at a
price per share of $12.60, net to the seller in cash, followed by a merger (the
"Merger") of the Purchaser with and into the Company pursuant to which the
Company will become a wholly-owned subsidiary of the Parent, with each remaining
outstanding Share to be converted into the right to receive $12.60 in cash. The
Company has also granted an irrevocable option (the "Option") to the Purchaser
to acquire that number of Shares, at a price of $12.60 per share, required to
control 90% of the fully diluted Shares outstanding (assuming the issuance of
the Shares pursuant to the Option), provided that the Purchaser has accepted for
payment pursuant to the Offer at least 66 2/3% but less than 90% of the Shares
outstanding prior to the exercise of the Option.
In arriving at our opinion, we have reviewed certain publicly available
business and financial information relating to the Company, as well as the
Merger Agreement and the draft Stock Option Agreement, dated as of April 26,
1998. We have also reviewed certain other information, including financial
forecasts, provided to us by the Company and have met with the Company's
management to discuss the business and prospects of the Company.
We have also considered certain financial and stock market data of the
Company, and we have compared those data with similar data for other publicly
held companies in business similar to the Company and we have considered the
financial terms of certain other business combinations and other transactions
which have recently been effected. We also considered such other information,
financial studies, analyses and investigations and financial, economic and
market criteria which we deemed relevant.
In connection with our review, we have not assumed any responsibility for
independent verification of any of the foregoing information and have relied on
its being complete and accurate in all material respects. With respect to the
financial forecasts, we have assumed that they have been reasonably prepared on
bases reflecting the best currently available estimates and judgments of the
Company's management as to the future financial performance of the Company. In
addition, we have not been requested to make, and have not made, an independent
evaluation or appraisal of the assets or liabilities (contingent or otherwise)
of the Company, nor have we been furnished with any such evaluations or
appraisals. Our opinion is necessarily based upon financial, economic, market
and other conditions as they exist and can be evaluated on the date hereof. In
connection with our engagement, we approached a limited number of third parties,
after approval by the Company, to solicit indications of interest in a possible
acquisition of the Company and held preliminary discussions with certain of
these parties prior to the date hereof.
<PAGE> 69
We have acted as financial advisor to the Company in connection with the
Merger and will receive a fee for our services, a significant portion of which
is contingent upon the consummation of the Merger.
In the ordinary course of our business, we and our affiliates may actively
trade the debt and equity securities of both the Company and the Parent for our
and such affiliates' own accounts and for the accounts of customers and,
accordingly, may at any time hold a long or short position in such securities.
It is understood that this letter is for the information of the Board of
Directors in connection with its consideration of the Offer and the Merger, and
does not constitute a recommendation to any stockholder as to whether or not
such stockholder should tender shares pursuant to the Offer or vote in favor of
the Merger and is not to be quoted or referred to, in whole or in part, in any
registration statement, prospectus or proxy statement, or in any other document
used in connection with the offering or sale of securities, nor shall this
letter be used for any other purposes, without our prior written consent.
Based upon and subject to the foregoing, it is our opinion that, as of the
date hereof, the consideration to be received by the stockholders of the Company
in the Offer and the Merger is fair to such stockholders from a financial point
of view.
Very truly yours,
CREDIT SUISSE FIRST BOSTON CORPORATION
<PAGE> 70
ANNEX III
DIRECTORS DESIGNATED BY PARENT
The name, age, present principal occupation and five-year employment
history of each of the directors designated by Parent are set forth below. All
such directors listed below are citizens of the United States and have their
principal business address at the office of Parent at 10801 Corporate Drive,
Kenosha, WI 53141-1430 (except S.F. Marrinan who has a principal business
address at the office of Parent located at 2801 80th Street, Kenosha, WI
53141-1410).
<TABLE>
<CAPTION>
PARENT DESIGNEE AGE PRINCIPAL OCCUPATION AND DIRECTORSHIPS
--------------- --- --------------------------------------
<S> <C> <C>
Branko M. Beronja 63 President -- Diagnostics since February 1998. Senior Vice
President -- Diagnostics, North America from April 1996 to
February 1998. President -- North American Operations from
April 1994 to April 1996, and Vice President -- Sales, North
America from August 1989 to April 1994. A Director since
January 1997.
Donald S. Huml 51 Senior Vice President -- Finance and Chief Financial Officer
since August 1994. Prior to joining Snap-on, he was Vice
President and Chief Financial Officer of Saint-Gobain
Corporation from December 1990 to August 1994.
Michael F. Montemurro 49 Senior Vice President -- Financial Services and
Administration since August 1994. Senior Vice President --
Financial Services, Administration and Chief Financial
Officer from April 1994 to August 1994. Senior Vice
President -- Finance and Chief Financial Officer from March
1990 to April 1994.
Susan F. Marrinan 49 Vice President, Secretary and General Counsel since January
1992.
</TABLE>
<PAGE> 71
ANNEX IV
DISSENTERS' RIGHTS
SUBCHAPTER XIII
SECTIONS 180.1301 THROUGH 180.1331
OF THE
WISCONSIN BUSINESS CORPORATION LAW
180.1301 DEFINITIONS. IN SS. 180.1301 TO 180.1331:
(1) "Beneficial shareholder" means a person who is a beneficial owner of
shares held by a nominee as the shareholder.
(1m) "Business combination" has the meaning given in s. 180.1130(3).
(2) "Corporation" means the issuer corporation or, if the corporate action
giving rise to dissenters' rights under s. 180.1302 is a merger or share
exchange that has been effectuated, the surviving domestic corporation or
foreign corporation of the merger or the acquiring domestic corporation or
foreign corporation of the share exchange.
(3) "Dissenter" means a shareholder or beneficial shareholder who is
entitled to dissent from corporate action under s. 180.1302 and who exercises
that right when and in the manner required by ss. 180.1320 to 180.1328.
(4) "Fair Value", with respect to a dissenter's shares other than in a
business combination, means the value of the shares immediately before the
effectuation of the corporate action to which the dissenter objects, excluding
any appreciation or depreciation in anticipation of the corporate action unless
exclusion would be inequitable. "Fair value", with respect to a dissenter's
shares in a business combination, means market value, as defined in s.
180.1130(9)(a) 1 to 4.
(5) "Interest" means interest from the effectuation date of the corporate
action until the date of payment, at the average rate currently paid by the
corporation on its principal bank loans or, if none, at a rate that is fair and
equitable under all of the circumstances.
(6) "Issuer Corporation" means a domestic corporation that is the issuer of
the shares held by a dissenter before the corporate action. (Last amended by Act
16, L. '91, eff. 5-13-91.)
180.1302 RIGHT TO DISSENT. -- (1) Except as provided in sub. (4) and s.
180.1008(3), a shareholder or beneficial shareholder may dissent from, and
obtain payment of the fair value of his or her shares in the event of, any of
the following corporate actions:
(a) Consummation of a plan of merger to which the issuer corporation is a
party if any of the following applies:
1. Shareholder approval is required for the merger by s. 180.1103 or
by the articles of incorporation.
2. The issuer corporation is a subsidiary that is merged with its
parent under s. 180.1104.
(b) Consummation of a plan of share exchange if the issuer corporation's
shares will be acquired, and the shareholder or the shareholder holding shares
on behalf of the beneficial shareholder is entitled to vote on the plan.
(c) Consummation of a sale or exchange of all, or substantially all, of the
property of the issuer corporation other than in the usual and regular course of
business, including a sale in dissolution, but not including any of the
following:
1. A sale pursuant to court order.
2. A sale for cash pursuant to a plan by which all or substantially
all of the net proceeds of the sale will be distributed to the shareholders
within one year after the date of sale.
(d) Except as provided in sub. (2), any other corporate action taken
pursuant to a shareholder vote to the extent that the articles of incorporation,
bylaws or a resolution of the board of directors provides that the voting or
nonvoting shareholder or beneficial shareholder may dissent and obtain payment
for his or her shares.
<PAGE> 72
(2) Except as provided in sub. (4) and s. 180.1008(3), the articles of
incorporation may allow a shareholder or beneficial shareholder to dissent from
an amendment of the articles of incorporation and obtain payment of the fair
value of his or her shares if the amendment materially and adversely affects
rights in respect of a dissenter's shares because it does any of the following:
(a) Alters or abolishes a preferential right of the shares.
(b) Creates, alters or abolishes a right in respect of redemption,
including a provision respecting a sinking fund for the redemption or
repurchase, of the shares.
(c) Alters or abolishes a preemptive right of the holder of shares to
acquire shares or other securities.
(d) Excludes or limits the right of the shares to vote on any matter
or to cumulate votes, other than a limitation by dilution through issuance
of shares or other securities with similar voting rights.
(e) Reduces the number of shares owned by the shareholder or
beneficial shareholder to a fraction of a share if the fractional share so
created is to be acquired for cash under s. 180.0604.
(3) Notwithstanding sub. (1)(a) to (c), if the issuer corporation is a
statutory close corporation under ss. 180.1801 to 180.1837, a shareholder of the
statutory close corporation may dissent from a corporate action and obtain
payment of the fair value of his or her shares, to the extent permitted under
sub. (1)(d) or (2) or s. 180.1803, 180.1813(1)(d) or (2)(b), 180.1815(3) or
180.1829(1)(c).
(4) Except in a business combination or unless the articles of
incorporation provide otherwise, subs. (1) and (2) do not apply to the holders
of shares of any class or series if the shares of the class or series are
registered on a national securities exchange or quoted on the National
Association of Securities Dealers, Inc., automated quotations system on the
record date fixed to determine the shareholders entitled to notice of a
shareholders meeting at which shareholders are to vote on the proposed corporate
action.
(5) Except as provided in s. 180.1833, a shareholder or beneficial
shareholder entitled to dissent and obtain payment for his or her shares under
ss. 180.1301 to 180.1331 may not challenge the corporate action creating his or
her entitlement under the action is unlawful or fraudulent with respect to the
shareholder, beneficial shareholder or issuer corporation. (Last amended by Act
16, L. '91 eff. 5-13-91.)
180.1303 DISSENT BY SHAREHOLDERS AND BENEFICIAL SHAREHOLDERS. -- (1) A
shareholder may assert dissenters' rights as to fewer than all of the shares
registered in his or her name only if the shareholder dissents with respect to
all shares beneficially owned by any one person and notifies the corporation in
writing of the name and address of each person on whose behalf he or she asserts
dissenters' rights. The rights of a shareholder who under this subsection
asserts dissenters' rights as to fewer than all of the shares registered in his
or her name are determined as if the shares as to which he or she dissents and
his or her other shares were registered in the names of different shareholders.
(2) A beneficial shareholder may assert dissenters' rights as to shares
held on his or her behalf only if the beneficial shareholder does all of the
following:
(a) Submits to the corporation the shareholder's written consent to
the dissent not later than the time that the beneficial shareholder asserts
dissenters' rights.
(b) Submits the consent under par. (a) with respect to all shares of
which he or she is the beneficial shareholder.
180.1320 NOTICE OF DISSENTERS' RIGHTS. -- (1) If proposed corporate action
creating dissenters' rights under s. 180.1302 is submitted to a vote at a
shareholders' meeting, the meeting notice shall state that shareholders and
beneficial shareholders are or may be entitled to assert dissenters' rights
under ss. 180.1301 to 180.1331 and shall be accompanied by a copy of those
sections.
(2) If corporate action creating dissenters' rights under s. 180.1302 is
authorized without a vote of shareholders, the corporation shall notify, in
writing and in accordance with s. 180.0141, all shareholders entitled to assert
dissenters' rights that the action was authorized and send them the dissenters'
notice described in s. 180.1322.
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<PAGE> 73
180.1321 NOTICE OF INTENT TO DEMAND PAYMENT. -- (1) If proposed corporate
action creating dissenters' rights under s. 180.1302 is submitted to vote at a
shareholders' meeting, a shareholder or beneficial shareholder who wishes to
assert dissenters' rights shall do all of the following:
(a) Deliver to the issuer corporation before the vote is taken written
notice that complies with s. 180.0141 of the shareholder's or beneficial
shareholder's intent to demand payment for his or her shares if the
proposed action is effectuated.
(b) Not vote his or her shares in favor of the proposed action.
(2) A shareholder or beneficial shareholder who fails to satisfy sub. (1)
is not entitled to payment for his or her shares under ss. 180.1301 to 180.1331.
180.1322 DISSENTERS' NOTICE. -- (1) If proposed corporate action creating
dissenters' rights under s. 180.1302 is authorized at a shareholders' meeting,
the corporation shall deliver a written dissenters' notice to all shareholders
and beneficial shareholders who satisfied s. 180.1321.
(2) The dissenters' notice shall be sent no later than 10 days after the
corporate action is authorized at a shareholders' meeting or without a vote of
shareholders, whichever is applicable. The dissenters' notice shall comply with
s. 180.0141 and shall include or have attached all of the following:
(a) A statement indicating where the shareholder or beneficial
shareholder must send the payment demand and where and when certificates
for certificated shares must be deposited.
(b) For holders of uncertificated shares, an explanation of the extent
to which transfer of the shares will be restricted after the payment demand
is received.
(c) A form for demanding payment that includes the date of the first
announcement to news media or to shareholders of the terms of the proposed
corporate action and that requires the shareholder or beneficial
shareholder asserting dissenters' rights to certify whether he or she
acquired beneficial ownership of the shares before that date.
(d) A date by which the corporation must receive the payment demand,
which may not be fewer than 30 days nor more than 60 days after the date on
which the dissenters' notice is delivered.
(e) A copy of ss. 180.1301 to 180.1331.
180.1323 DUTY TO DEMAND PAYMENT. -- (1) A shareholder or beneficial
shareholder who is sent a dissenters' notice described in s. 180.1322, or a
beneficial shareholder whose shares are held by a nominee who is sent a
dissenters' notice described in s. 180.1322, must demand payment in writing and
certify whether he or she acquired beneficial ownership of the shares before the
date specified in the dissenters' notice under s. 180.1322(2)(c). A shareholder
or beneficial shareholder with certificated shares must also deposit his or her
certificates in accordance with the terms of the notice.
(2) A shareholder or beneficial shareholder with certificated shares who
demands payment and deposits his or her share certificates under sub. (1)
retains all other rights of a shareholder or beneficial shareholder until these
rights are canceled or modified by the effectuation of the corporate action.
(3) A shareholder or beneficial shareholder with certificated or
uncertificated shares who does not demand payment by the date set in the
dissenters' notice, or a shareholder or beneficial shareholder with certificated
shares who does not deposit his or her share certificates where required and by
the date set in the dissenters' notice is not entitled to payment for his or her
shares under ss. 180.1301 to 180.1331.
180.1324 RESTRICTIONS ON UNCERTIFICATED SHARES. -- (1) The issuer
corporation may restrict the transfer of uncertificated shares from the date
that the demand for payment for those shares is received until the corporate
action is effectuated or the restrictions released under s. 180.1326.
(2) The shareholder or beneficial shareholder who asserts dissenters'
rights as to uncertificated shares retains all of the rights of a shareholder or
beneficial shareholder, other than those restricted under sub. (1), until these
rights are canceled or modified by the effectuation of the corporate action.
180.1325 PAYMENT. -- (1) Except as provided in s. 180.1327, as soon as the
corporate action is effectuated or upon receipt of a payment demand, whichever
is later, the corporation shall pay each
3
<PAGE> 74
shareholder or beneficial shareholder who has complied with s. 180.1323 the
amount that the corporation estimates to be the fair value of his or her shares,
plus accrued interest.
(2) The payment shall be accompanied by all of the following:
(a) The corporation's latest available financial statements, audited
and including footnote disclosure if available, but including not less than
a balance sheet as of the end of a fiscal year ending not more than 16
months before the date of payment, an income statement for that year, a
statement of changes in shareholders' equity for that year and the latest
available interim financial statements, if any.
(b) A statement of the corporation's estimate of the fair value of the
shares.
(c) An explanation of how the interest was calculated.
(d) A statement of the dissenter's right to demand payment under s.
180.1328 if the dissenter is dissatisfied with the payment.
(e) A copy of ss. 180.1301 to 180.1331.
180.1326 FAILURE TO TAKE ACTION. -- (1) If an issuer corporation does not
effectuate the corporate action within 60 days after the date set under s.
180.1322 for demanding payment, the issuer corporation shall return the
deposited certificates and release the transfer restrictions imposed on
uncertificated shares.
(2) If after returning deposited certificates and releasing transfer
restrictions, the issuer corporation effectuates the corporate action, the
corporation shall deliver a new dissenters' notice under s. 180.1322 and repeat
the payment demand procedure.
180.1327 AFTER-ACQUIRED SHARES. -- (1) A corporation may elect to withhold
payment required by s. 180.1325 from a dissenter unless the dissenter was the
beneficial owner of the shares before the date specified in the dissenters'
notice under s. 180.1322(2)(c) as the date of the first announcement to news
media or to shareholders of the terms of the proposed corporate action.
(2) To the extent that the corporation elects to withhold payment under
sub. (1) after effectuating the corporate action, it shall estimate the fair
value of the shares, plus accrued interest, and shall pay this amount to each
dissenter who agrees to accept it in full satisfaction of his or her demand. The
corporation shall send with its offer a statement of its estimate of the fair
value of the shares, an explanation of how the interest was calculated, and a
statement of the dissenter's right to demand under s. 180.1328 if the dissenter
is dissatisfied with the offer.
180.1328 PROCEDURE IF DISSENTER DISSATISFIED WITH PAYMENT OR OFFER. -- (1)
A dissenter may, in the manner provided in sub. (2), notify the corporation of
the dissenter's estimate of the fair value of his or her shares and amount of
interest due, and demand payment of his or her estimate, less any payment
received under s. 180.1325, or reject the offer under s. 180.1327 and demand
payment of the fair value of his or her shares and interest due, if any of the
following applies:
(a) The dissenter believes that the amount paid under s. 180.1325 or
offered under s. 180.1327 is less than the fair value of his or her shares
or that the interest due is incorrectly calculated.
(b) The corporation fails to make payment under s. 180.1325 within 60
days after the date set under s. 180.1322 for demanding payment.
(c) The issuer corporation, having failed to effectuate the corporate
action, does not return the deposited certificates or release the transfer
restrictions imposed on uncertificated shares within 60 days after the date
set under s. 180.1322 for demanding payment.
(2) A dissenter waives his or her right to demand payment under this
section unless the dissenter notifies the corporation of his or her demand under
sub. (1) in writing within 30 days after the corporation made or offered payment
for his or her shares. The notice shall comply with s. 180.0141.
180.1330 COURT ACTION. -- (1) If a demand for payment under s. 180.1328
remains unsettled, the corporation shall bring a special proceeding within 60
days after receiving the payment demand under s. 180.1328 and petition the court
to determine the fair value of the shares and accrued interest. If the
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<PAGE> 75
corporation does not bring the special proceeding within the 60-day period, it
shall pay each dissenter whose demand remains unsettled the amount demanded.
(2) The corporation shall bring the special proceeding in the circuit court
for the county where its principal office or, if none in this state, its
registered office is located. If the corporation is a foreign corporation
without a registered office in this state, it shall bring the special proceeding
in the county in this state in which was located the registered office of the
issuer corporation that merged with or whose shares were acquired by the foreign
corporation.
(3) The corporation shall make all dissenters, whether or not residents of
this state, whose demands remain unsettled parties to the special proceeding.
Each party to the special proceeding shall be served with a copy of the petition
as provided in s. 801.14.
(4) The jurisdiction of the court in which the special proceeding is
brought under sub. (2) is plenary and exclusive. The court may appoint one or
more persons as appraisers to receive evidence and recommend decision on the
question of fair value. An appraiser has the power described in the order
appointing him or her or in any amendment to the order. The dissenters are
entitled to the same discovery rights as parties in other civil proceedings.
(5) Each dissenter made a party to the special proceeding is entitled to
judgment for any of the following:
(a) The amount, if any, by which the court finds the fair value of his
or her shares, plus interest, exceeds the amount paid by the corporation.
(b) The fair value, plus accrued interest, of his or her shares
acquired on or after the date specified in the dissenter's notice under s.
180.1322(2)(c), for which the corporation elected to withhold payment under
s. 180.1327.
180.1331 COURT COSTS AND COUNSEL FEES. -- (1)(a) Notwithstanding ss. 814.01
to 814.04, the court in a special proceeding brought under s. 180.1330 shall
determine all costs of the proceeding, including the reasonable compensation and
expenses of appraisers appointed by the court and shall assess the costs against
the corporation, except as provided in par. (b).
(b) Notwithstanding ss. 814.01 and 814.04, the court may assess costs
against all or some of the dissenters, in amounts that the court finds to be
equitable, to the extent what the court finds the dissenters acted arbitrarily,
vexatiously or not in good faith in demanding payment under s. 180.1328.
(2) The parties shall bear their own expenses of the proceeding, except
that, notwithstanding ss. 814.01 to 814.04, the court may also assess the fees
and expenses of counsel and experts for the respective parties, in amounts that
the court finds to be equitable, as follows:
(a) Against the corporation and in favor of any dissenter if the court
finds that the corporation did not substantially comply with ss. 180.1320
to 180.1328.
(b) Against the corporation or against a dissenter, in favor of any
other party, if the court finds that the party against whom the fees and
expenses are assessed acted arbitrarily, vexatiously or not in good faith
with respect to the rights provided by this chapter.
(3) Notwithstanding ss. 814.01 to 814.04, if the court finds that the
services of counsel and experts for any dissenter were of substantial benefit to
other dissenters similarly situated, the court may award to these counsel and
experts reasonable fees to be paid out of the amounts awarded the dissenters who
were benefited.
5
